The native of McKinney, Texas, counted all four par 5s among his six-birdie round.
Jay Choi had a 67 and six others were tied at 68, including Michigan State's Eric Jorgensen.
Mahan's 66 also gave him and partner Brett Jones (69) a two-shot lead over Alan Hill (68) and J.J. Wall (69) in the team competition. Mahan and Jones are representing the St. Louis qualifier, while Hill and Wall are playing for San Antonio.
Defending champion Chez Reavie, who is trying to be the first player to repeat since Billy Tuten in 1983, shot a 1-over 73. Danny Green, last year's runner-up, shot a 69.
Chris Rivard, playing in the first threesome, had the day's highlight with the tournament's first double-eagle since 1982. Rivard, who shot a 73, used a driver and 2-iron for his 2 on the par-5 15th.
The field of 156 will be cut to 64 following Tuesday's second round, after which the tournament will switch to match play. The winner of Saturday's 36-hole final will receive an invitation to the 2003 Masters, as long as he does not turn pro in the meantime.
The tournament, being played about 20 miles north of Detroit in Macomb County, is open to amateur golfers who do not have playing privileges on a private course.