A pair of Australians in Adam Scott and Peter Lonard and amateur Eddie Lee of New Zealand were joined by the English duo of Nick Faldo and Barry Lane in a tie for third at 5-under 67.
Els began his round on the back nine at the Composite course of the Royal Melbourne Golf Club. The South African birdied the opening par-5 10th before making his only mistake of the day with a bogey on the following hole. He then birdied the par-4 12th to get back in the red.
After back-to-back birdies from the 15th, Els made the turn at 4-under before going on a stretch of four birdies over the first five holes on the inward nine.
'This morning was cool so I felt like the greens were giving us a little bit of feedback if we hit good shots in there and that's what happened,' said Els.
Els, who did not win an event worldwide last year, missed only one green in regulation. His best finish at this event came in 1999 when he joined Lonard and Germany's Bernhard Langer in a tie for second.
'I will play as well as I can this week and see how it goes. I enjoy playing this course and feel really good,' said Els.
Pilkington got off to a rocket start on the front nine with three straight birdies from the first. He added two more birdies to make the turn at 5-under.
He carried his momentum onto the 10th with a birdie to pose a threat to Els' lead. The 23-year-old eventually cooled down coasting at even-par over the final eight holes to close out a flawless 6-under 66.
Faldo used an eagle on the par-5 2nd to go along with four birdies for his 67. His only dropped shot came with a bogey at the par-3 11th.
'I had a bogey when I hit it over the green and hit a bad chip shot. But that was it,' said Faldo. 'Other than that I hit it in play most of the time, into the fairways and hit some good iron shots into the greens and really putted well.'
Defending champion Michael Campbell, who is looking for his third straight Heineken Classic title, had a bogey-free round en route to a 4-under 68. The New Zealander is joined by Australians Craig Perry and Peter O'Malley, England's David Howell, Sweden's Patrik Sjoland, and Marc Farry of France four shots off the lead.
A group of seven players finished tied for 14th, including Greg Norman. The 46-year-old had five birdies and two bogeys for a 3-under 69.
John Daly headed a group of 17 tied at one-under 71. Daly, currently 47th in the latest World Golf Rankings, will need to hold a position inside the top 50 through the Honda Classic, March 7-10, in order to earn an invitation to the Masters in April.
Full-Field Scores from the Heineken Classic