Second-half goals by Cristiano Ronaldo and Karim Benzema saw off Granada and fired Real Madrid to the top of the Primera Division for the first time since May 2012.
Newly crowned Ballon d'Or winner Ronaldo opened the scoring for the hosts after 57 minutes and then played a part in Benzema's goal, which wrapped up the points 19 minutes later.
This was not a vintage performance from Madrid, who were playing their seventh game in January, and they were frustrated for large parts of the game by a tough Granada side who gave them little space to counter-attack until late in the second half.
Carlo Ancelotti's side temporarily move two points clear of Atletico Madrid and Barcelona at the league's summit, and although they could be third again by Sunday, the Italian's aim of "going to sleep top of the league" was realised.
Before kick-off Ronaldo showed off his glinting Ballon d'Or trophy to the Bernabeu faithful and the former Manchester United man could have given his team the perfect start when he broke free down the left but shot well wide of the far post.
Manuel Iturra risked scoring an own goal a short while later as he attempted to clear a deep cross from Dani Carvajal, heading the ball off the crossbar.
Gareth Bale hit a wayward shot over the bar, and then right before half-time Ronaldo almost scored a sensational overhead kick but Granada goalkeeper Roberto fisted the ball away.
Bale was replaced at half-time by Jese, the Welshman not enjoying the best of afternoons after getting hit in the groin by a tough challenge from Jeison Murillo.
Benzema saw a header strike the bar early in the second half, although he had been ruled offside anyway, and Luka Modric, playing in a far more advanced rule than usual, shot over the bar while trying to score a rebound.
Ronaldo finally broke the deadlock on 57 minutes, shimmying past two defenders inside the area before blasting into the bottom corner - but Granada's players were furious Modric had not put the ball out of play earlier when Mohamed Fatau went down injured in the middle of the pitch.
Ronaldo had an opportunity to double the lead midway through the second half after getting on the end of a through ball by Carvajal, but Roberto was able to block the shot with his thigh.
The Portuguese then hit a deflected free-kick off the bar.
Although Ronaldo was unable to find a second goal, he will take comfort from the fact it was his flick towards Marcelo which opened up the Granada defence, allowing Benzema to side-foot home when the Brazilian's low cross arrived.
Di Maria launched a low shot just wide of the near post before he was substituted, and Isco made his first league appearance in three games, but was unable to add to the goals in his 12 minutes on the pitch.