World number two Donald made a flying start in his bid to record back-to-back victories as he fired a seven under 65 to move one stroke ahead of top-ranked McIlroy, Briton Marc Warren and Gonzalo Fernandez-Castano of Spain at the European Tour's season-ending tournament.
Donald, who won the Dunlop Phoenix title in Japan last week, was not at his best in the early stages and had to sink a putt of eight feet at the first and 15 feet at the fourth to avoid dropping two strokes.
He then reeled off seven birdies in a scintillating 10-hole sweep from the fifth to overpower his rivals at a Greg Norman-designed Earth course softened by a monsoon-like downpour at the start of the day.
McIlroy, who has already clinched the 2012 money-list titles on both sides of the Atlantic, enjoyed a purple patch of form on the back nine as he squeezed five birdies into a seven-hole stretch from the 10th.
"I got off to a bit of a slow start. I felt I was hitting the ball well enough to give myself opportunities for birdies and didn't quite do it," said the 23-year-old Northern Irishman.
"I just had to stay patient over the first few holes and then I got it together on the back nine. It was a great way to start the tournament."
McIlroy was slightly disappointed with his five at the last hole because a four would have put him in a two-ball with Donald in Friday's second round.
"I really wanted to make a birdie there so that I could play with him tomorrow," he said. "I wasn't able to do it but I feel if I can carry on playing the way I did today I might have a chance to play with him on Saturday.
"He's obviously playing very well. He's the second-ranked player in the world and very tough to beat.”
Donald came to this event last year with the pressure heaped on his shoulders during an eventually successful bid to become the first player to clinch the money-list crowns on both sides of the Atlantic.
"It was nice to pick up from where I left off in Japan and I felt very comfortable out there," he said after a round that began in overcast conditions and ended in scorching heat. "You always feel different the week after winning.
"You just feel like you have that little extra pep in your step and there's a bit more confidence flowing through for sure. Winning by five shots last week gave me a huge boost."
"The feeling was definitely different today," said the 34-year-old. "There was a lot more at stake for me a year ago.
"This time round I'm just playing to win the tournament so things feel a little bit easier."
Donald, who is chasing his fourth victory of another sparkling season, was in positive mood after adding a 65 to his two rounds of 66 at the end of last year's Dubai showpiece.
"I'm proving to myself I can play this course and when you keep posting rounds like that you feel more confident about knowing you can play around this place," he said.
"I feel like I'm at the peak of my career. That's always a good feeling."
The dream scenario for Donald now would be a head-to-head duel in the sun with McIlroy on Sunday for the first prize of $1.33 (€1 million).
"I'd love that challenge," said the Englishman. "Rory is number one in the world and it would be fun for us, for the fans and for the people watching on TV.
"It would be a great way to end the year although there is a long way to go. There's no point thinking ahead to Sunday just yet."
In joint fifth place on 67 were Ireland's Padraig Harrington, Swede Fredrik Andersson Hed, Martin Kaymer of Germany, British pair Lee Westwood and Richie Ramsay and South Africa's Louis Oosthuizen.