"I played very well. I only made one mistake - at the 15th," said the Spaniard.
"It is always nice to be near the top of the leaderboard. I like the course the way it was. All in all a very good day for Spain," he added.
It could have been an even better day but for a bogey finish by Olazabal.
The 1994 and 1999 Masters champion had moved to four under as he cut through the infamous Amen Corner but he came to grief at the par-five 15th.
Another bogey on 18 and the 35-year-old had to be satisfied with a two-under 70.
Spanish "wonder kid" Garcia also shot a two-under 70 but was furious with the condition of the course.
Heavy rain earlier in the week had softened up the normally slick greens.
 Harrington: Disastrous back nine contained three bogeys and one double bogey
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"I feel like I've been robbed," said the 21-year-old. "I hit the ball so well. I probably hit three shots which if they had been two foot longer would have been perfect. What can you do?" he complained.
"I felt the greens were really, really slow for Augusta.
"It was really hard to make up your mind to hit it hard. It was not until 11 or 12 before I started to hit the putts harder," he added.
Denmark's Thomas Bjorn, who beat Tiger Woods to win last month's Dubai Open, joined Olazabal and Garcia at two-under after a shaky start.
The 30-year old reached the turn level but a brilliant eagle at the 15th put him firmly in red figures.
 Clarke: Up and down round but finished level
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Ian Woosnam, also surprised by the sluggish greens, brought back memories of his 1991 win with a one-under 71. Since winning his Green Jacket 10 years ago, Woosnam has not managed to finish better than 14th.
Northern Ireland's Darren Clarke managed to keep his cool when he opened with a bogey. He quickly picked up the dropped shot four holes later to go out in level par.
An up and down second nine that contained two bogeys and two birdies allowed him to sign for a even par 72 and stay well in the hunt.
Colin Montgomerie needed to draw on all his reserves to salvage an opening round that looked headed for disaster.
 Bjorn: Brilliant eagle at the 15th
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The burly Scot began well enough, making a birdie at the tough par-three fourth. But four holes later disaster struck when he slumped to a double bogey on the par-five eighth.
Still reeling he dropped another shot on the ninth. Followed it up with a bogey on 10 and 12 and looked certain to have booked himself an early flight home.
But the 37-year-old showed why he was seven-time winner of the European money list by grabbing three birides over his closing four holes to end the day only one over.
Although he will need to make a move on Friday at least his hopes of winning his first Major are still alive, if somewhat frail.
 Montgomerie: Never won a Major title
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Three-time Master champion Nick Faldo made an even bigger hash of it, crashing down the leaderboard thanks to a triple bogey at the punishing par-three 12th. Two holes later he developed a nose bleed and then to add insult to injury he was warned for slow play.
He finished three over.
Ireland's Padraig Harrington looked set for a sub-par round with an outward one-under 35.
But it all went wrong on the homeward nine for the 29-year-old Dubliner as he clocked up three bogeys and one double bogey to slump to three-over par.
