Portugal's Ronaldo showed off his FIFA World Player of the Year trophies before the kickoff in the Santiago Bernabeu stadium.
To mark the occasion, other Real Madrid winners of the Ballon d'Or were paraded, including his compatriot Luis Figo, Brazil's Ronaldo, Michael Owen and home coach Zinedine Zidane.
The star-studded guest list witnessed a one-sided affair as La Liga's bottom club Granada was unable to cope with Real's attacking threat which saw Los Blancos four-up inside 31 minutes.
Isco was first on the score sheet after an interchange with Karim Benzema, who quickly grabbed the second goal.
Ronaldo, rested for the midweek Copa del Rey win over Sevilla, then powered home his 17th of the season from a Marcelo cross to get off the mark for the year.
Luka Modric set up Isco for the fourth as Real coasted to victory.
The only goal of the second half saw Casemiro net after a James Rodriguez free kick, Real moving six points clear of Barcelona with the Catalans facing a difficult trip to Villarreal Sunday.
European champion Real is unbeaten since April last year, to match the record set by Barcelona, which went from October 2015 to March 2016 without a loss in all competitions.
"There is no limit, but we have to do everything possible to make sure it lasts," said Zidane of his team's incredible streak.
Rooney matches great Charlton
Meanwhile, there was more record-equaling achievement in Manchester United's 4-0 FA Cup third round win over second-flight Reading.
Wayne Rooney netted the opener for Jose Mourinho's Red Devils, his 249th for the club to match the mark of club legend Bobby Charlton, who was watching from the stands at Old Trafford.
Rooney, who has lost his place in the regular Manchester United lineup, was recalled for the domestic cup tie.
He struck the seventh minute from Juan Mata's cross and might have added to his tally in a dominant home performance.
The 31-year-old was making his 543rd appearance for United. He also broke Charlton's England scoring record of 49 goals in October 2015.
"It's a proud moment," Rooney told BT Sport.
"To be up there in terms of goals with Sir Bobby is a huge honor. Hopefully I will be there on my own soon," he added.
Mourinho's team is on an impressive winning streak in the English Premier League and after the historic opener added further goals through Antony Martial, Rooney with the assist, and a second half double from Marcus Rashford, his first goals since September.
In other FA Cup action, Olivier Giroud scored yet another crucial late goal to spare Arsenal's blushes at Preston.
Arsenal was trailing 1-0 to a Callum Robinson goal and might have been further behind until Aaron Ramsey equalized just after halftime.
The tie looked set to go to a replay until French ace Giroud popped up to net with a scrambled effort in the 89th minute, his fourth goal in four games.
Arsenal manager Arsene Wenger has never lost a third round tie.