Diego Simeone's side, who opened their campaign with a 3-1 win at Sevilla, were three goals to the good by half-time as Raul Garcia, Diego Costa and Arda Turan all found the back of the net.
Rayo decided to tighten up in defence after Tiago added a fourth following the break but Garcia made sure there was no escaping a rout with one last goal on the stroke of full-time.
The city rivals exchanged warning shots before Atletico set about taking absolute control of the contest.
First, Niguez Saul's long-range effort sailed over the home crossbar before Arda saw his bullet header cleared to safety by Nacho.
In the 17th minute, however, Garcia would not be denied with his head as the ball beat David Cobeno from Gabi's corner.
Rayo barely had time to gather their thoughts when Costa arrived in the six-yard box to tuck home a second goal from Arda's cross.
The Vallecas outfit might have switched the dynamic in the 24th minute when Roberto Trashorras teed up Joaquin Larrivey for a header, but the Argentinian's effort sailed too high.
Arda got among the goals in the 35th minute, collecting Costa's long ball forward to beat Cobeno with a deft finish from close range.
The interval could not have come any sooner for Rayo, and they would only survive eight minutes of the second half before conceding again.
Costa provided the spark once again as his cross from the left allowed Tiago to power home a bullet header from the middle of the box.
Former Barcelona striker David Villa repeatedly fell foul of the offside trap as he looked for a first league goal in Atleti colours, while Trashorras kept Rayo dreaming of an unlikely comeback with a speculative drive from distance.
Adrian came sniffing for the fifth Atleti goal in the 78th minute but his right-footed effort clattered the crossbar.
It was too little, too late when Rayo enjoyed a late rally with Saul forcing a smart stop from Thibaut Courtois before Larrivey headed Trashorras' free-kick just over the bar three minutes from time.
And 30 seconds before the final whistle, Garcia danced onto Koke pass from the left to further humiliate the club from the east side of town.