Lee Westwood also got off to a good start with a two-under-par round of 70 on the opening day.
Westwood opened up his round in miserable fashion with a double bogey, but birdied the second and ninth to get back to level par before adding more birdies on 10, 13 and 15.
Only a bogey on 17 stopped him breaking 70, but considering his start it was still a great round from a man who has finished second, 11th and third in the last three years.
Justin Rose also opened up with a 70, but considering that he had birdies on his first two holes he was left frustrated not to have gone even lower.
Lynn, playing in only his third Major championship, rocketed out of the blocks with a birdie on the first, then picked up further shots at the par-5 8th and par-4 9th holes to be three under par for his opening nine.
A bogey on the 10th pegged him back, but he birdied the 11th, 12th and 15th to get to five under par with three holes left.
A bogey on the tricky 17th saw him slip back, but he still finished four under par and in the lead on his own in a dream start to his Masters career. Lynn is on course to become the first debutant to hold the first round lead since Brett Wetterich in 2007.
The Wigan-born 39-year-old, who has two wins to his name - one on the European Tour, one on the Challenge Tour - earned his spot in the tournament by finishing second to Rory McIlroy in last year's US PGA - which was his first appearance in a Major since the 2003 Open Championship.
Lynn has forged a reputation as one of golf's funny men, a wisecracking Englishman who does not take himself or the game too seriously.
When he is not golfing, he is tweeting jokes and photos of himself participating in the 'planking' craze where people post images of themselves lying face down in unusual locations.
By Lynn's own admission, he has a wacky sense of humour, which is just as well because he has only one tournament win in 18 years as a professional.
But he has undergone a dramatic transformation in the last year. He has still got the gags but his golf game has suddenly taken off.
"If you speak to more or less every golfer who is out here on various tours, they all believe that they have performances in them as good as the top guys," Lynn said.
"I've always believed that I could perform well. I just don't do it consistently enough. Why? I don't know."
Last August, in just second appearance at a major, Lynn made the golfing world sit up and take notice of him when he finished second at the US PGA Championship in South Carolina.
Buoyed by his success, he moved to the United States and joined the US PGA Tour. He has not exactly set the world on fire but just last month he played alongside Tiger Woods at the Honda Classic, where he finished tied for fourth.
On Thursday, he made a spectacular Master debut, shooting a four-under-par 68 to be near the top of the leaderboard after briefly finding himself out in front.
"It's obviously not a bad thing to see your name up there leading the Masters and something you could always look back on," Lynn said. "But you know, there's a lot to be done for the rest of the week and hopefully I can keep my name up there."
Lynn's first competitive round at Augusta National featured six birdies, eliciting roars of approval from the galleries that have quickly taken to his flippant approach to life.
He has been nicknamed Lynn-sanity but insists he is not mad for believing he can make a charge at the Masters.
"I'm just enjoying it at the moment. Being on the PGA Tour, it's been a new lease of life to my golf," he said.
"I'm not going to sit here and say I'm going to be there Sunday night, but deep down, I know that I've got performances in me that could put me there Sunday night."