Goals by Karim Benzema, Sami Khedira, Mesut Ozil and Sergio Ramos helped bury the idea that Lyon were a bogey team as Jose Mourinho's men made it eight goals scored and none conceded from three matches in this season's competition.
Until Real beat Lyon 4-1 on aggregate last season to move beyond the last 16 for the first time in six years, the French side had held the upper hand in meetings between the two clubs.
"I thought Madrid were [title] favourites before the game and I still think they are," Lyon coach Remi Garde told reporters.
Mourinho, back in front of the media after completing a UEFA ban, brushed away the favourite's tag by saying there was still much work to do.
"From the first minute I thought we were going to win this game," the Portuguese said. "Qualification is practically assured and now it is important to secure first place... because in theory this gives you an advantage.
"Every point from now on is worth another million [euros] and this is important in these times of crisis."
LITTLE AMBITION
Lyon, level with Ajax Amsterdam on four points, showed little ambition and tried to defend deep.
Cristiano Ronaldo glanced a corner towards the back post and Benzema slid in to score the opener against his former club in the 19th minute as Real threatened to overwhelm the visitors.
Lyon's Bafetimbi Gomis had a goal ruled out for offside in the 28th minute but it was a rare attacking foray as the chances stacked up for Ronaldo and company.
Soon after the second-half restart Benzema broke away down the left and crossed low into the centre for midfielder Khedira to stroke in the second.
Visiting keeper Hugo Lloris then helped in Ozil's cross-cum shot in the 55th minute.
Lyon seemed more concerned with avoiding a heavy defeat towards the end as Real's in-form duo Kaka and Gonzalo Higuain entered the fray.
However, their defence was static when Ramos won a header at a corner, waited for the ball to bounce and then volleyed in the fourth.
