Los Galacticos stormed in to an early lead inside 20 seconds when Ronaldo sent the Real fans into raptures with a quick strike.
Raul doubled the home side's lead on 20 minutes with a fine header from a sublime David Beckham cross-field ball to leave Atletico goalkeeper German Burgos stranded off his line.
Real should have made it three in the second half but Ronaldo and Raul conspired to hit the same post with strikes, when it looked easier to score.
Despite that, Carlos Queiroz's men were the better side on the night and the win leapfrogs them above Valencia to go two points clear at the top of La Liga.
Deportivo La Coruna failed to make ground on the frontrunners after being held to a 1-1 draw at Real Valladolid.
Following a 0-0 first half, a Jonathan own-goal gave visiting Depor the lead four minutes after the break but Oscar Gonzalez was able to equalise in the second half for Valladolid, as Javier Irureta's men had to settle for a point.
Osasuna took all three points from the Montjuic after Pierre Webo struck with three minutes to go to give the away side a 1-0 win at bottom club Espanyol.
This despite playing the second half with ten men after Antonio Lopez was sent off just before the break for two bookable offences.
Malaga scored the big result of the night with a 5-1 demolition of Barcelona at La Rosaleda.
Salva Ballesta scored a hat-trick for the home side while Diego Alonso and Manuel Fiestras Canabal added single strikes for Malaga while Barca replied through a Fernando Sanz own goal 11 minutes from time.
Second half goals by Samuel Eto'o and Campano led Mallorca to a 2-0 win at Villarreal.
Celta Vigo and Albacete played out a 2-2 draw at the Balaidos. Jose Ignacio and Pablo Andres Contreras scored for the home side while Antonio Pacheco and Carlos Reina Aranda replied for Albacete.
Finally, Real Betis were held to a 1-1 draw by Murcia, with both sides having finished with ten men after Murcia's Mikel Roteta and Betis' Gutierrez Luis Fernandez were both red carded.
Betis substitute Ismael Lopez gave the home side the lead three minutes after the break but a Luis Garcia Fernandez penalty in the last minute gave the visitors a point.
Click below for match summaries:
La Liga
Celta Vigo 2-2 Albacete
Espanyol 0-1 Osasuna
Malaga 5-1 Barcelona
Real Betis 1-1 Murcia
Real Madrid 2-0 Atletico Madrid
Valladolid 1-1 Deportivo La Coruna
Villarreal 0-2 Mallorca
Click here for an Primera Liga table.
