The 32-year-old South African fired a 5-under-par 66 to join Australian Rod Pampling atop the leaderboard at The Grand Golf Club.
Brad Andrews birdied the last to finish alone in third place with a 67, while fellow Aussies Peter Lonard, Michael Wright and Brett Ogle each shot 68 to tie for fourth at minus-three.
Els, whose 32 victories worldwide include two U.S. Open titles, bolted out of the gate Thursday with a hole-out from the first fairway for eagle followed by a birdie at the second hole.
'It was a nice start wasn't it, 80 yards in with a wedge and birdied the next so it was the start I wanted,' Els said. 'I dont think I've ever had a start like that before.'
A bogey at the third hole was offset by a birdie at the fifth, and a birdie at the seventh lifted Els to a 4-under-par front nine of 31.
Els picked up another stroke on the inward stretch after mixing birdies at Nos. 10, 12 and 13 with bogeys at the 11th and 14th holes.
'On the whole I think I scrapped around with the last few holes but this course will really do that to you -- you've got to be very patient and disciplined out there,' he said. 'I didn't drive the ball all that well or as good as last week I don't think, but I was happy with the round regardless.'
Els is riding high after teaming up with reigning U.S. Open champ Retief Goosen to capture the WGC-EMC World Cup for South Africa last week in Japan. Although the win was unofficial, Els could use a victory here to extend his run of consecutive years with at least one win worldwide to 10.
Stuart Appleby, who slipped to two-over after a costly triple-bogey at the par-5 12th, notched four birdies over the last six holes to finish in a six-way tie at 2-under par.
Robert Allenby, Geoff Ogilvy and Gareth Paddison, a trio that finished 1-2-3, respectively, at last week's Australian PGA Championship, were among eight players to shoot even-par 71.
Former NCAA champion Charles Howell III, whose surprisingly strong first season on the PGA Tour in the U.S. has him currently 45th in the world rankings, is Down Under to solidify his position in the top-50 in order to qualify for the 2002 Masters.
Howell struggled to a 4-over 75 in the opening round and was tied for 62nd, while Denmark's Thomas Bjorn, ranked 23rd in the world, turned in a 76 for a share of 72nd place.
Full-Field Scores From the Holden Australian Open