The 23-year-old, riding for Team V-Spring Racing, took gold in 34.419 seconds in Manchester, ahead of Vicky Williamson and Katy Marchant.
"It's nice to retain a title and the 500 is a really important event," she said. "I'm happy with how it went."
Callum Skinner took gold in the men's 1km time trial.
Jon Gildea won the para-cycling pursuit in the C1-C5 mixed category, while Lora Turnham and Corrine Hall took victory the BVI mixed event.
Varnish, who won the 500m time trial, keirin, individual sprint and team sprint at last year's championships, beat a field including world team pursuit champion Katie Archibald and double Olympic champion Laura Trott.
Skinner, 22, triumphed in an impressive time of 1:01.843, with Matt Crampton taking silver and Matt Rotherham bronze.
"I know I had good form but I wasn't expecting to win," said Skinner. "I couldn't be happier."
The competition runs until Sunday 28 September.
Jess Varnish began her quest to retain her four national titles by winning the women's 500m time trial at the British National Track Championships.