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At 21, McIlroy is the youngest first-round leader in the tournament's history, bettering the 23-year-old Severiano Ballesteros, who went on to win his first green jacket in 1980.
The Ulsterman had purposely favoured a low-key approach to his third campaign at Augusta National after missing the cut last year, and it paid immediate dividends as he bagged three birdies in a row from the second.
He went out in 32 and picked up more shots at 11, 14 and 15, where his eagle putt came agonizingly close to dropping in, before signing for a pace-setting 65.
It was his best round to date at Augusta by five shots and the best opening round at the famed Georgia layout since Greg Norman's course record of 63 in 1996.
It looked like he would have the sole overnight lead until 28-year-old Spaniard Quiros, playing in the last grouping, birdied the last two holes to draw level.
"I would take 65 all day long, but it could have been lower," McIlroy said, citing a missed birdie chance at the last.
"It's a great start to the tournament. I felt that my game has been good all season. I feel very comfortable with my game and it was nice to see a few putts drop in and hopefully I can build on it."
Quiros, whose 65 was 10 shots better than his previous best at Augusta, said that he had been surprised with his performance as he had been struggling with his game despite winning in Dubai in February.
"The weather was perfect, I was playing good and I was lucky with the putting, so I can't complain really," he said.
McIlroy and Quiros ended the day two strokes clear of South Koreans Yang Yong-Eun and K.J. Choi and three strokes clear of American pair Matt Kuchar and Ricky Barnes.
Yang said that Augusta National was especially suited for Koreans.
"It's a very good course for Koreans, for us. It's typical of a Korean course, so if you're on a good day, I think that it's to our advantage, really, this course is," he said.
Kuchar said: "Really pleased with where I finished. It's a great spot. Played solid golf."
"Rory is seven-under; that's fantastic. The conditions were there. It was just still. If ever you could shoot a good score, it would be today. But seven under is pretty amazing. He's a great player."
England's Ross Fisher, Americans Brandt Snedeker and Gary Woodland, Spain's Sergio Garcia, South Africans Charl Schwartzel and Trevor Immelman, the champion in 2008, and Geoff Ogilvy of Australia were next best a further shot back.
Playing conditions at Augusta National were perfect for low scoring with warm and sunny weather throughout the day for the 99-strong field, the largest for the Masters in 45 years.
By the end of it, 30 players had bettered par.
But among those who failed to find their touch were world No. 1 Martin Kaymer, who struggled to a 78 and Ireland's three-time major winner Padraig Harrington, who had a disappointing 77.
Tiger Woods opened with a 71 and world No. 2 Lee Westwood had a level par 72.
The tournament got underway as open as it has been for years with defending champion Phil Mickelson the favorite and with four-time champion Woods looking to record his first tournament win in almost 18 months.
They were facing a daunting challenge from a brimming-with-confidence European contingent that now dominates the world top 10.
Woods, the 14-time major winner whose ultimate goal remains Jack Nicklaus' benchmark of 18 majors, made a quiet start with five straight pars before he got into red figures with a birdie at the par-three sixth.
Bogeys at 10 and 11, however, pinned him back at one over before back-to-back birdies at 13 and 14 improved his position.
"I hit beautiful putts all day - couple of bad ones, but the round should have been 68 or 69," he said.
Asked if he was happy with his position on the leaderboard, Woods wisecracked: "Absolutely, I'm only six back!"
Woods has not won at Augusta National since 2005 and his last major win came at the 2008 US Open, after which he took time off to have knee surgery and then saw his marriage dissolve due to his infidelity.
Kaymer was left shaking his head after once again failing to come to grips with Augusta National where he has missed the cut on his two previous appearances.
"I think that I don't really know how to play the golf course," was the German's blunt assessment of his round, adding that he would turn to compatriot and two-time former Masters champion Bernhard Langer for help.
Mickelson was in the penultimate grouping of the day and he opened with seven straight pars before snatching his first birdie at the par-four eighth.
Scrambling mainly to save pars after wayward drives, he grabbed birdies at 14 and 15 before bogeying the last to settle for two under.
"I scrambled well to stay in (the tournament), but I also let four or five birdie opportunities slide," he said.
Complete scores on Thursday after the first round of the 75th Masters tournament at par-72 Augusta National Golf Club:
65 - Rory McIlroy (NIR) 32-33, Alvaro Quiros (ESP) 33-32
67 - Yang Yong-Eun (KOR) 32-35, K.J. Choi (KOR) 35-32
68 - Matt Kuchar (USA) 33-35, Ricky Barnes (USA) 34-34
69 - Ross Fisher (ENG) 33-36, Brandt Snedeker (USA) 35-34, Sergio Garcia (ESP) 34-35, Charl Schwartzel (RSA) 32-37, Trevor Immelman (RSA) 36-33, Geoff Ogilvy (AUS) 34-35, Gary Woodland (USA) 38-31
70 - Sean O'Hair (USA) 37-33, Camilo Villegas (COL) 35-35, Gregory Havret (FRA) 37-33, Rickie Fowler (USA) 37-33, Hiroyuki Fujita (JPN) 33-37, Retief Goosen (RSA) 31-39, Kim Kyung-Tae (KOR) 36-34, Ryan Moore (USA) 34-36, Paul Casey (ENG) 36-34, Phil Mickelson (USA) 35-35
71 - Ryan Palmer (USA) 37-34, Ryo Ishikawa (JPN) 34-37, Tiger Woods (USA) 35-36, Angel Cabrera (ARG) 35-36, Miguel Angel Jimenez (ESP) 36-35, Fred Couples (USA) 35-36, Stewart Cink (USA) 36-35
72 - Alex Cejka (GER) 38-34, David Chung (USA) 36-36, Anders Hansen (DEN) 36-36, Heath Slocum (USA) 37-35, Adam Scott (AUS) 37-35, Nick Watney (USA) 35-37, Jason Day (AUS) 37-35, Lee Westwood (ENG) 36-36, Robert Karlsson (SWE) 34-38, D.A. Points (USA) 36-36, Peter Hanson (SWE) 37-35, David Toms (USA) 36-36, Hideki Matsuyama (JPN) 35-37, Luke Donald (ENG) 38-34, Steve Stricker (USA) 36-36, Jim Furyk (USA) 35-37, Peter Uihlein (USA) 36-36, Jhonattan Vegas (VEN) 38-34
73 - Jonathan Byrd (USA) 36-37, Sandy Lyle (SCO) 36-37, Jeff Overton (USA) 37-36, Kevin Na (USA) 36-37, Tim Clark (RSA) 36-37, Bo Van Pelt (USA) 37-36, Larry Mize (USA) 39-34, Jeong Jin (KOR) 36-37, Ben Crane (USA) 36-37, Zach Johnson (USA) 37-36, Jose Maria Olazabal (ESP) 36-37, Jason Bohn (USA) 37-36, Anthony Kim (USA) 37-36, Bubba Watson (USA) 37-36, Justin Rose (ENG) 34-39
74 - Jerry Kelly (USA) 38-36, Dustin Johnson (USA) 38-36, Martin Laird (SCO) 37-37, Bill Haas (USA) 37-37, Rory Sabbatini (RSA) 37-37, Graeme McDowell (NIR) 35-39, Charley Hoffman (USA) 36-38, Ian Poulter (ENG) 34-40, Steve Marino (USA) 35-39, Edoardo Molinari (ITA) 36-38, Yuta Ikeda (JPN) 34-40
75 - Aaron Baddeley (AUS) 34-41, Carl Pettersson (SWE) 34-41, Hunter Mahan (USA) 36-39, Ernie Els (RSA) 35-40, Francesco Molinari (ITA) 35-40, Robert Allenby (AUS) 39-36, Stuart Appleby (AUS) 36-39, Kevin Streelman (USA) 36-39, Nathan Smith (USA) 38-37, Lucas Glover (USA) 38-37, Davis Love (USA) 39-36, Louis Oosthuizen (RSA) 39-36
76 - Vijay Singh (FIJ) 38-38, Mark Wilson (USA) 37-39, Mike Weir (CAN) 39-37, Lion Kim (USA) 37-39
77 - Mark O'Meara (USA) 39-38, Padraig Harrington (IRL) 38-39
78 - Ben Crenshaw (USA) 41-37, Martin Kaymer (GER) 38-40, Ian Woosnam (WAL) 37-41
79 - Tom Watson (USA) 40-39
80 - Arjun Atwal (IND) 37-43, Craig Stadler (USA) 41-39
83 - Henrik Stenson (SWE) 45-38
