A trio of Australians in Greg Norman, Peter O'Malley and Stephen Leaney are tied for second at 8-under 136 along with Mark Pilkington of Wales.
Despite dropping three shots on his round, including a short par miss on the 17th, Els managed to stay clear of the rest of the field.
'I could have got a lot more out of the round,' said Els. 'I had quite a few chances but you can't always play the way you want to play.'
The South African hit a 2-iron just short of the green on the par-5 9th to set up the first of three consecutive birdies around the turn. On the 12th he had a chance to make it four straight but his birdie try missed right.
Els played at even-par until the bogey on the 17th. On the following hole he hit his approach to within 15-feet of cup and the two-time U.S. Open winner then rolled in the putt for his sixth birdie of the day.
After capturing the Vodacom Players Championship at the Royal Cape Golf Club in South Africa at the end of 2001, Els extended his streak of years with a victory worldwide to 10.
Norman played a solid round that included an eagle on the par-5 10th, his first. The 46-year-old added back-to-back birdies from the 17th and later got up and down out of a green-side bunker for a birdie on the 5th. His only mistake came with a bogey at the 8th, but the Australian countered with a birdie on the last.
'I thought the pins were tough yesterday,' said Norman. 'I think there are some tougher ones out there today. All in all I can't complain. I look forward to playing well on the weekend.'
O'Malley enjoyed a bogey-free round en route to a 68 while Pilkington had five birdies to go along with three bogeys for a round of 2-under 70.
The best round of the day belonged to Richard Lee, who had eight birdies to go along with an eagle on the par-5 2nd for a course-record 10-under 62. He broke the mark of nine-under 63 originally established by Ian Baker-Finch in 1990.
'I'm really amazed with what I've done,' said Lee. 'I thought if I got through the first nine even-par then I could get three birdies on the way back I'd make the cut.'
The 28-year-old New Zealander did much better finishing at 7-under 137 to stand alone four shots off the lead.
Australians Robert Allenby (68) and Peter Lonard (71) were joined by South African Trevor Immelman (69) and David Howell (70) of England at 6-under 138.
Adam Scott (72) of Australia is part of a group at 5-under while two-time defending champion Michael Campbell (72) of New Zealand joined England's Nick Faldo and nine others at 4-under 140.
John Daly converted an eagle on the par-5 9th, his last, to fall on the cut mark at even-par 144.
'I just hung in there and tried to do my best,' said Daly. 'That eagle was a big relief.'
One of the notables who failed to qualify for the weekend was England's Justin Rose. The 21-year-old, who earned his first European Tour victory at the Dunhill Championship two weeks ago, had two double-bogeys on the round to finish at 2-over 146.
Full-Field Scores from the Heineken Classic