Madrid had too much firepower as Gareth Bale, a Tomasz Jodlowiec own goal and Marco Asensio handed the hosts a comfortable half-time lead despite Miroslav Radovic’s penalty.
Lucas Vazquez and Alvaro Morata came off the bench to round off the scoring after the break.
Dortmund beat Sporting Lisbon 2-1 in the other game in the group, meaning Madrid and the Germans remain tied at the top of the pool on seven points.
Meanwhile, Juan Cuadrado came off the bench to score a late winner as 10-man Juventus beat Lyon 1-0 in France in Champions League Group H.
The Italian champions saw Gianluigi Buffon save a first-half Alexandre Lacazette penalty and then had Mario Lemina sent off early in the second period.
But substitute Cuadrado struck in the final quarter of an hour to stun the home fans at the Parc OL and leave the Serie A giants, Champions League runners-up in 2015, in a strong position in their section.
They are level at the top of Group H on seven points along with Sevilla, who were 1-0 winners away to Dinamo Zagreb in Croatia, while Lyon sit four points back in third place.
Tottenham Hotspur preserved their unbeaten record away this season with a goalless draw at Bayer Leverkusen on Tuesday after Stefan Kiessling’s late miss for the hosts.
Having now drawn their three group games, Leverkusen are third with three points while Spurs stay second behind leaders AS Monaco who drew 1-1 at bottom side CSKA Moscow.
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