Ireland's Padraig Harrington shot a 6-under-par 65 to share third place with Robert Karlsson of Sweden.
Casey, who is enjoying his most successful season to date on the European Tour with two victories to his name, started on the back nine at Club de Campo and picked up his first birdie of the day at the par-4 13th.
He added birdies at 15 and 17 before knocking his approach within six feet of the cup at the par-4 18th. Casey then drained the birdie putt to make the turn at 4 under.
The Englishman continued his fine play on the front side and landed his second shot within 12 feet at the par-5 fourth for an eagle.
Casey reached minus-7 with a birdie at the fifth after his approach dropped inside eight feet but he found trouble with a bogey at the very next hole.
The 26-year-old recovered quickly, however, and reached the green in two at the par-5 seventh. Casey two-putted for birdie and added a birdie at the eighth to secure the opening-round lead.
'I didn't expect much especially as I decided to throw out the window the things I was working on,' said Casey. 'I didn't hit it well the last two days, so I forgot how I was swinging it.'
Garcia holed out for an eagle at the par-4 fifth and added an eagle at the par-5 seventh to move to minus-4. He stumbled with a bogey at the eighth but responded with a birdie at the par-3 ninth after his tee shot stopped 16 feet from the cup.
The young Spaniard hit his second shot to four feet for a birdie at the 10th and landed his tee shot inside two feet for a tap-in birdie at the par-3 11th to make it three in a row.
Garcia faltered with a bogey at the 16th but ran home a 25-foot putt for a birdie at the 17th. At the par-4 18th, Garcia hit his approach to 14 feet and sank the putt to finish alone in second.
France's Thomas Levet, who was in a playoff at the British Open two years ago, collected six birdies and a bogey to finish alone in fifth place at 5-under-par 66.
Angel Cabrera, Peter Fowler, Gregory Havret, Barry Lane, Manuel Moreno, Nick O'Hern, Jarmo Sandelin, Miles Tunnicliff and Spanish amateur Gonzalo Fernandez-Castano were one shot further back at 4-under-par 67.
Defending champion Steen Tinning, who is retiring after this event because of a back injury, finished in a group at 3-under-par 68 that featured Lee Westwood, Ignacio Garrido and Ian Woosnam.
'I knew around the time of the Volvo PGA Championship that it wasn't going to get any better so I made the decision then,' said Tinning. 'It was a very difficult decision to make because I had been a professional on the European Tour for 16 years and it had become my way of life.'