The Spanish side, who lost their first Champions League match 2-0 away to Lyon a fortnight ago, produced a stunning performance to defeat Kiev who now have two losses from two matches in Group E.
Going for their 10th European champions title, Real opened the scoring in the 20th minute when Kiev and Ukraine national keeper Olexandr Shovkovskiy failed to deal with a Roberto Carlos cross only to see van Nistelrooy hammer home the loose ball.
Six minutes later, Raul headed a Jose Antonio Reyes pass past Shovkovskiy to make it 2-0, with Reyes then getting on the score sheet himself when he struck a superb half-volley from just inside the box in first half injury time.
An Artem Milevskiy goal for Kiev just two minutes into the second half wasn't enough to spoil the party in Madrid with Raul scoring his second after 61 minutes, and van Nistelrooy converting from the penalty spot to complete the rout after being brought down by Shovkovskiy in the 68th minute.
The Kiev keeper was shown a red card for his indiscretion adding to a miserable night for the visiting Ukrainian team who are now bottom of their Group after two matches.
"A shocking error of judgement, but then we made some terrible errors throughout game," said Kiev coach Anatoliy Demyanenko referring to Shovkovskiy's dismissal and his team's lacklustre display on the night.
Van Nistelrooy delivers
For new Real signing Ruud van Nistelrooy his Champions League brace capped off a special day after his wife gave birth to a daughter named Moa at 1am local time on the day of the match against Kiev.
"It has been an unbelievable day for me," the former Manchester United player told Real Madrid television.
Rock the cradle: van Nistelrooy (L)
celebrates his goals and new baby
"I didn't get much sleep last night and it has been a long day after hooking up with the team. But I couldn't be happier right now. I told my wife that I'd score tonight and in the end I got two."
Even with the dominant 5-1 scoreline, home coach Fabio Capello still found time to pick out areas in which his team could improve.
"We let them have too many chances and not all our opponents will be so generous to us...we made some defensive errors," Capello said.
"There were some things I didn't like but on a night like this I can't complain too much," he added.
Other Champions League results
In the other Group E match, Olympique Lyon remained undefeated and lead the group after a 3-0 win away at Steaua Bucharest with goals from Brazilian striker Fred, midfielder Tiago, and late substitute Karim Benzema.
Group F saw Manchester United go top, also undefeated as they won 1-0 over Benfica through a 60th minute Louis Saha strike in Portugal, while Celtic registered their first points with a 1-0 victory over FC Copenhagen in Glasgow.
Man United's Louis Saha (R) shoots
past Benfica defender Anderson
Striker Kenny Miller scored from the spot for Celtic in the 36th minute after midfielder Shunsuke Nakamura was tripped in the box by Copenhagen's Michael Gravgaard.
Arsenal captain Thierry Henry continued his return to form as he opened the scoring at the Emirates Stadium in the 38th minute, and then set up Alexander Hleb for the Gunners' second three minutes after the break as the Londoners defeated Porto 2-0.
The win gives Arsenal the outright lead in Group G, with CSKA Moscow scoring a 1-0 win over Hamburg SV in Moscow after a 59th minute Dudu Silva strike.
In Group H there were no winners on Matchday 2 as Lille drew 0-0 with AC Milan in northern France while AEK Athens also split the points with Anderlecht after a 1-1 draw in Greece.
Nicolas Frutos' goal for the visiting Anderlecht in the 25th minute was swiftly cancelled out just three minutes later when Julio Cezar equalised for the Athenians who remain bottom of their group with one point from two matches.