Ronaldo's penalty, a second from Higuain and a late Benzema third gave the home team three points.
Real Madrid have yet to find their top form and have been more steady than spectacular so far this season. They began the match in much the same vein, although the first opportunity fell to Espanyol and Jose Callejon who was played in by Joan Verdu, but his first time volley whistled wide of the far post.
A warning for the home team and one they duly replied to when Angel Di Maria was played through on the right side of the penalty box by Mesut Oezil but Carlos Kameni was equal to the Argentine's shot, putting it out for a corner.
Madrid seemed more settled and were passing the ball quicker and with a sharpness not seen so far this season.
They then won a penalty when a Cristiano Ronaldo free kick struck the hand of Luis Garcia in the wall, the referee gave the spot kick much to the annoyance of the Espanyol players.
Cristiano Ronaldo had to retake the penalty as he was judged to have fainted after his run-up was complete, but he held his nerve and made it 1-0 at the second attempt.
That settled Jose Mourinho's team as they were keeping the ball well, but they were given a warning just before half time when Verdu was left unmarked on the penalty spot but his low side footed shot went way wide.
Espanyol may have had the better chances but los Merengues certainly had more of the ball as the half-time whistle blew.
After the interval, the Periquitos looked more lively as the searched for an equaliser with the best opportunity falling to Verdu whose shot from inside the area was well parried by Iker Casillas.
Things got worse for Madrid as Pepe was sent off for two bookable offences, but Espanyol's numerical advantage did not last long as Ernesto Galan was sent off for a dangerous challenge on Ronaldo moments later, though it could be argued it was not a red card offence.
Madrid looked to put the match to bed and had some perfect opportunities to do so as Higuain and Sergio Ramos both squandered fabulous openings. But Higuain eventually hit the back of the net after latching onto a superb Ronaldo pass.
Karim Benzema then made it three with a late strike and Juan Forlin was sent off for his protestations after the goal which earned him a second yellow card.
The victory put Jose Mourinho's men on top of La Liga for the time being as Valencia face off with Atletico Madrid on Wednesday, while Espanyol remain in eighth place.
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