Novak Djokovic was, though, left far from happy after he thought he had won the first set when Dimitrov fired long when set-point down at 4-5.
That call was overruled though and the Bulgarian went on to take the opening set 8-6 in the tie-break.
More controversy was to follow in the second as with Djokovic a break down at 2-4, he aggravated an ankle injury he suffered when playing for his country in the Davis Cup last month and had to take a medical timeout.
The Madrid crowd weren't pleased with what they saw as gamesmanship from the Australian Open champion and Djokovic was roundly booed when he returned to the court and immediately broke back.
Djokovic then went on to save a match point as he won an engrossing second set tie-break 10-8.
However, Dimitrov reacted incredibly well to that disappointment in the third as he broke the eight-time Grand Slam champion in the first game of the third set and then held his own serve before breaking again in the final game to seal the win.
Earlier, Roger Federer made a winning return after a two-month absence from the court as he cruised to a 6-3, 6-3 win over Radek Stepanek to move into the third round of the Madrid Open on Tuesday.
A solitary break in the fourth game was enough for the Swiss world No. 2 to take the first-set 6-3.
And despite a hiccup when serving for the match at 5-2, he immediately broke Stepanek once more to seal his passage into round three where he will face either Japan's Kei Nishikori or Viktor Troicki of Serbia.
Andy Murray also went through but was made to struggle at times by World No. 26 Florian Mayer, before coming through in two tie-breaks.
Mayer was made to rue numerous opportunities to have taken the first set as he passed up five set points in the tie-break before world No. 3 Murray made sure with a crosscourt forehand on his second set-point.
The German surged ahead at the start of the second set and led 4-1 before Murray broke back for the first time in the match at 4-2 to force the game into a second tie-break.
And the Briton was far more dominant at the second time of asking as he began to read Mayer's serve to good effect and wrapped up the tie-break 7-3 to move into round three, where he will meet France's Gilles Simon.
Earlier, Serbian World No.9 Janko Tipsarevic became the first seed in the men's event to fall as he was beaten by clay court specialist Juan Monaco 7-5, 6-3.
Eighth seed Richard Gasquet also suffered an early exit as the Frenchman was beaten 7-5, 3-6, 6-4 by Spaniard Daniel Gimeno-Traver and 12th seed Milos Raonic was defeated by local favourite Fernando Verdasco 6-4, 2-6, 7-6 (9/7).
World No. 15 Stanislas Wawrinka, however, continued his fine form after winning the Portugal Open last week with a comfortable 6-4, 6-4 win over Romanian qualifier Marius Copil.
In the women's event World No. 1 Serena Williams eased into the third round with a 6-2, 7-5 win over Spain's Lourdes Dominguez Lino.
The American had struggled early on in her first-round match against Kazak qualifier Yulia Puntitseva, but began much brighter as she broke Dominguez Lino straight away on her way to winning the first set 6-2.
The second set started in a similar vein as Williams seized a 2-0 lead, but Dominguez Lino fought back bravely to level matters at 2-2 before the next seven games went with serve.
However, the World No. 47 finally crumbled when serving to stay in the match at 5-6 as Williams broke to love to seal victory.
Second seed Maria Sharapova also cruised into round three as she swept aside American qualifier Christina McHale 6-1, 6-2 in just an hour and six minutes.
Nadia Petrova and Dominika Cibulkova were the seeds to bow out on the women's side on Tuesday to Svetlana Kuznetsova and Sabine Lisicki respectively, but there were wins for 14th seed Marion Bartoli and 16th seed Ana Ivanovic.