We present the methodology for and detail the implementation of the Dark Energy Survey (DES) 3x2pt DES Year 1 (Y1) analysis, which combines configuration-space two-point statistics from three different cosmological probes: cosmic shear, galaxy-galaxy lensing, and galaxy clustering, using data from the first year of DES observations. We have developed two independent modeling pipelines and describe the code validation process. We derive expressions for analytical real-space multi-probe covariances, and describe their validation with numerical simulations. We stress-test the inference pipelines in simulated likelihood analyses that vary 6-7 cosmology parameters plus 20 nuisance parameters and precisely resemble the analysis to be presented in the DES 3x2pt analysis paper, using a variety of simulated input data vectors with varying assumptions. We find that any disagreement between pipelines leads to changes in assigned likelihood $Delta chi^2 le 0.045$ with respect to the statistical error of the DES Y1 data vector. We also find that angular binning and survey mask do not impact our analytic covariance at a significant level. We determine lower bounds on scales used for analysis of galaxy clustering (8 Mpc$~h^{-1}$) and galaxy-galaxy lensing (12 Mpc$~h^{-1}$) such that the impact of modeling uncertainties in the non-linear regime is well below statistical errors, and show that our analysis choices are robust against a variety of systematics. These tests demonstrate that we have a robust analysis pipeline that yields unbiased cosmological parameter inferences for the flagship 3x2pt DES Y1 analysis. We emphasize that the level of independent code development and subsequent code comparison as demonstrated in this paper is necessary to produce credible constraints from increasingly complex multi-probe analyses of current data.
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