O’Sullivan, 50, took the first five frames and has a 7-2 lead, needing just three frames to win when the match resumes on Wednesday (14:30 BST).
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Elsewhere, world number one Judd Trump recovered from a 4-1 deficit to beat Gary Wilson 10-5 and Shaun Murphy won 10-9 in a thrilling encounter against China’s Fan Zhengyi.
O’Sullivan withdrew from the Masters in January and only played in three of the six qualifying events in 2026, reaching the final of the World Open in China last month.
During that tournament he achieved a break of 153, the highest ever recorded in professional billiards.
O’Sullivan was playing at the Crucible during his 34th season and instantly took control as breaks of 72, 97 and 113 helped him take a 5-0 lead, with the 25-year-old He, the world number 47, already looking beaten.
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He managed to win two frames in a row, but O’Sullivan won the last two frames of the session, helped by breaks of 52 and 86.
O’Sullivan will look to close out Wednesday’s match quickly and a win would set up a thrilling last-16 tie against four-time world champion John Higgins.
Murphy defeats China’s Fan in the final Crucible finale
Former winner Shaun Murphy made it to the last 16 after beating China’s Fan Zhengyi 10-9 in a thrilling late night finish to their first round tie.
Murphy, the 2005 champion, trailed 53-17 in the deciding frame, but the 25-year-old Fan missed a hard red in the center pocket, and the Englishman held his nerve to take the win.
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It was the first 10-9 scoreline of the tournament, with the match ending at 23:46 BST in front of a packed and enthralled crowd at Sheffield’s famous theatre.
Murphy had led 3-1, but after Fan, the world number 63, reduced it to 3-3, the pair alternated frames, with Fan never leading in the match.
There was a strange incident in frame 17 when Murphy was shooting and the light on the other table, which had gone out when the match between Judd Trump and Gary Wilson ended, came on.
Murphy made the pot, but after a brief delay, he missed his next attempt while using the rest, although he still won the frame.
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In the round of 16, Murphy will face another Chinese player, Xiao Guodong.
A ‘Rusty Ron’ ‘masterclass’
Despite achieving that record 153 in March, which came after he benefited from a snooker that left him with a free ball, which then acted as a red number 16, O’Sullivan had claimed he was not in good form.
He did not turn up for Friday’s media day, but speaking to BBC Two before the match, he said his game “hadn’t really been very good for three years” and had been “very, very poor”.
O’Sullivan said he was trying to change his approach to snooker, adding: “A lot of people will say I’m rusty, that’s why I said ‘Rusty Ron’, I’m very happy to be called that.
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“I don’t need a lot of practice and I don’t need to play a lot of tournaments to win and play well.”
But O’Sullivan quickly shook off any “rust” as he moved into a controlling position and it would be a huge shock if he was able to fight back.
Ken Doherty, 1997 world champion and one of the BBC’s experts, said: “This really has been a masterclass from Ronnie O’Sullivan. It’s been like watching a genius at work.”
Stephen Hendry, who like O’Sullivan has won seven Crucible titles, a joint record in the modern era, added: “Ronnie O’Sullivan makes it look easy, but for him it’s bread and butter.
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“He always dominated the players he had to, it’s one of the strong points of his career. You just know what you’re there to do, you’re there to win the game.”
Trump rallies from 4-1 deficit to defeat Wilson
Judd Trump beat John Higgins 18-9 in the 2019 World Championship final (Getty Images)
World number one Judd Trump recovered from a slow start to defeat Gary Wilson in his first round match.
Trump, the 2019 champion, lost four of the first five frames and Wilson, in 27th place, took a 4-1 lead.
But Trump then claimed the final four frames of the session, including superb breaks of 128 and 77, to maintain a 5-4 lead.
However, Wilson, a three-time qualifying event winner, made the highest break of the session with an excellent clearance of 139 in the fifth frame.
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In Tuesday’s second session, Wilson made a break of 58 to make the score 5-5, but Trump pulled away winning five in a row to seal a 10-5 success.
Trump, 36, has held first place in the world ranking since August 2024 and will extend that streak if he reaches the quarterfinals.
“I like being number one, it’s going to be difficult to keep it unless I do very well next season, but I’m very proud of it,” he said.
Trump lives in Dubai but, due to the recent conflict in the Middle East, he temporarily left the area.
“I had to stay in Thailand for a month and managed to practice for the World Championships, but now everything is back to normal,” he said.
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“Dubai is still my base, I’ve been back there in recent weeks and everything is normal.”
A pessimistic Wilson, speaking to BBC Four, said: “It’s a constant disappointment. “I am, and always have been since I was 13, a better player than this.
“It’s a constant struggle. The howling is getting worse and I’m just getting over it.”
Pullen, 20, impresses in Crucible debut
Liam Pullen and Chris Wakelin finish their match on Wednesday (Getty Images)
Liam Pullen quit the World Snooker Tour at the end of last season, only to regain his tour card weeks later at Q School.
The 20-year-old from York is ranked 86th in the world and had to battle through four qualifying rounds to make his Crucible debut.
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Before the tournament began, he spoke of how, aged 12, he had watched the 2018 final between Mark Williams and Higgins and was “dazzled” by a chance encounter with the Scot in a Pizza Express.
But if he felt any nerves, Pullen did not show it by making breaks of 57, 63, 97 and 58, although he is still 4-5 behind against his compatriot Chris Wakelin, last year’s quarterfinalist.
Wakelin, helped by breaks of 66 and 82, has a one-frame lead and the match will end on Wednesday at 10:00.
But Pullen can be pleased with his performance and was another bright spot for the young English players after 19-year-old Stan Moody gave 2024 champion Kyren Wilson a real scare before losing 10-7 on Monday.
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China’s Wu Yize, the 22-year-old tenth seed, recorded the largest margin of victory of this year’s tournament by thrashing compatriot Lei Peifan 10-2.
Wu became the fourth Chinese player to reach the round of 16, where he will play either four-time winner Mark Selby or 2024 runner-up Jak Jones.