Johnstone was number two in the world on the FIS World Cup circuit in 2009, but suffered an ankle injury in January in training for Vancouver 2010, missing out on a chance to make his Olympic debut.
The 19-year-old AIS scholarship holder placed third in his qualifying heat on 36.5 points from the judges, with Japanese rider Masakaze Yoshida leading the points on 41.3.
With only the top two from each of the three heats gaining direct entry to the final, he then lined up in the semi-final alongside Vancouver Olympian Scott James.
The former world number two put down a smooth first run to sit in second place on 39.3 points, then switched up to Cab 10 instead of a Cab 7 for his second run to top the semi-final result list with 41.7 points.
Scott James put down a smooth first run in the semis but unfortunately fell on his final run, missing out on a place among the top six who progressed through to the final.
In the final Johnstone performed his same run - a Front 9, Back 9, Front 7, Cab 10 and a straight air - to end the competition in second place on 42.2 points.
Japanese rider Taku Hiraoka took the gold on 44.2 points, with Manuel Pietropoli from Italy in third place on 39.8.
James ended up in 15th place, while fellow Aussie Jarryd Williams finished in 22nd position after narrowly missing out on a place in the semi-final by just 0 .1 of a point.
Jason Maxfield placed 30th, Charlie Steinbacher 31st and Sam Murphy 39th.
In the women's competition, Amber Arazny placed 15th, one spot ahead of Lauren Stavely.