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The Hyundai driver produced a committed run through the 2.82km super special held in front of a bumper crowd in Coimbra city centre to move into a 0.6s lead over team-mate Ott Tanak.
The rally began with a fan friendly technical asphalt test, featuring a roundabout and several tight turns - with the traditional gravel set to return for the remainder of the event - based around Porto.
Neuville and team-mate Tanak were inch perfect through the narrow roads, but the former is likely to face a much tougher task on Friday, running second on the road of the dusty gravel stages.
"We are still discovering,” said Neuville. “A really nice opening stage - it's good to see the crowds again because the last three years have been not so nice. Hopefully it will be a great fight this weekend.”
M-Sport’s Craig Breen emerged third fastest some 1.4s adrift of the Hyundai duo as the Irishman headed team-mate Gus Greensmith.
Returning eight-time champion Sebastien Ogier took first blood in the battle of the returning multiple WRC champions, as he piloted the third GR Yaris to fifth ahead of championship leader Kalle Rovanpera and the Toyota of Takamoto Katsuta.
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Nine-time champion Sebastien Loeb could only manage the eighth fastest time after losing valuable seconds when navigating the final tight left hand hairpin, as the Frenchman climbed back aboard an M-Sport Ford Puma.
Loeb was however faster than Elfyn Evans, who had topped the day’s shakedown on gravel. The Welshman dropped 3.5s to pacesetter Neuville on the opening stage.
Adrien Fourmaux completed the top 10, 0.2s quicker than M-Sport team-mate Pierre-Louis Loubet.
Hyundai’s Dani Sordo was the slowest of the record 12 car Rally1 field as his first start of the 2022 season began with an overshoot on a roundabout that cost him 7.2s, leaving the Spaniard down in 18th overall.
The rally resumes on Friday with crews set to tackle eight gravel stages.