There was a narrow escape for fourth seed David Nalbandian who had to fight his way back from 5-2 down in the third set to beat off a determined challenge from French qualifier Julien Benneteau, winning through 6-7, 6-2, 7-5.
The Argentine now faces an intriguing third round clash against former British number one Tim Henman who upset Spanish 14th seed David Ferrer 6-1, 4-6, 6-1.
Former winner Marat Safin, who beat Nalbandian in the 2004 final, also had to overcome stiff resistance from Jose Acasuso before claiming a 7-6, 6-7, 6-3 win over the Argentine.
The Russian will now play Marcos Baghdatis of Cyprus in the second round.
Massu, who reached the Madrid final in 2003 but is unseeded this year, played some fine aggressive tennis in the opening set against Federer, but the top seed made so few errors that the Chilean struggled to find any chinks in his armour.
Federer, playing in Madrid for the first time in three years, found his rhythm almost immediately on the rapid hard court surface and soon settled into playing his trademark compact tennis.
The Swiss broke once in the first set and twice in the second to extend his winning streak to 15 matches.
"I think I played the big points better than he did which made it easier for me," said Federer. "If I hadn't done that it could have turned out much harder, but it was a perfect result."
He will play the winner of the match between Spain's former number one Juan Carlos Ferrero and Robin Soderling of Sweden in the third round.
POWERFUL SERVE
Sixth seed Andy Roddick took full advantage of his powerful serve to see off Frenchman Sebastien Grosjean 6-4, 7-6.
Spain's Tommy Robredo, who captured the biggest title of his career when he won the Hamburg Masters in May, also progressed after a gritty 7-6, 7-6 win over Argentine Juan Ignacio Chela.
The 24-year-old became the first Spaniard to win in Madrid after first-round defeats for five of his compatriots including Carlos Moya, Fernando Verdasco and Feliciano Lopez.
The 32-year-old Henman, who lost to Federer in the final of the Japan Open in Tokyo earlier this month, ripped through the first set and although he lost the second he rose to the challenge in the third with some aggressive play at the net.
"I think I wasn't as consistent as yesterday but in the first and third sets I was probably even better," said the Briton. "It was fantastic, I couldn't be happier."
Torrential overnight rain delayed the start of the morning matches after the roof in the Madrid Arena sprang a leak and organisers had to wait for workmen to lay out tarpaulin sheets to prevent more water getting on to the courts.
Frenchman Gael Monfils had to retire after straining an ankle when he leapt into the air while a set up in his first round match against Slovak Dominik Hrbaty and brought a premature end to his season.
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