Spaniard Javier Colomo assumed the lead on six-under (64) with veteran compatriot Miguel Angel Jimenez a shot further back and Australian Andrew Dodt also excelling at Fanling.
World No 1 McIlroy, who won the title last year by holing a bunker shot on the final hole, had a 'poor day at the office'.
With just one birdie on the par five third and four bogeys in his round, the Northern Irishman has work to do in order to make the cut let alone retain the tournament title.
Pádraig Harrington didn't fare much better than McIlroy. The Dubliner carded a one-over-par 71 after a rollercoaster of a round which included four bogeys and three birdies.
Peter Lawrie was going best of the Irish on one-under-par after 17 holes, while Corkonian Niall Turner finished on four-over par.
The 48 year old Jimenez, who would become the oldest ever winner on the European Tour with victory this weekend, started with a hat-trick of birdies and was clear of the field until finishing with back-to-back bogeys at the ninth and 10th.
That gave Jimenez an early one-stroke lead over Europe's Ryder Cup captain Jose Maria Olazabal, Fredrik Andersson Hed, Zhang Liang-wei, YE Yan, Lorenzo Gagli and Matteo Manassero, but he was later surpassed by Javier Colomo who birdied his final hole to go to six under and Australia's Andrew Dodt who had completed 16 holes.
New Zealand's former US Open champion Michael Campbell, now 43, was among those in the clubhouse on three under.
Jimenez, chasing a third victory in the event, said: "I'm putting very well and it's a pity I missed a fairway on the ninth and then on the last got a big flyer.
"The first time I came here in 2004 I won (his other win was three years later). It's an old-fashioned course - not very long, but you need to be very precise."
Playing partner Olazabal said: "I hit three poor shots, but apart from those the rest of the game was pretty solid. Obviously I have to consolidate this the next few days, but it's nice to have some signs like this one."
Jimenez has slumped from 44th in the world to 98th this season and is close to becoming only the sixth player to appear in 600 Tour events.
The 65 matched his lowest score of the year.