Zinedine Zidane's side were a long way from their free-flowing best, but Isco's goals in either half were enough to end a run of three league matches without a win at home and keep pace with leaders Barcelona, who remain seven points ahead of them.
Cristiano Ronaldo's wait for a first LaLiga goal of the season goes on with the Portuguese superstar squandering two excellent chances to get off the mark in the first half.
As violent scenes marred the Catalan independence referendum in Espanyol's home city of Barcelona, Madrid fans waved Spanish flags and chanted "Viva Espana".
Quique Sanchez Flores' side did pose problems for the hosts' backline throughout, but they proved powerless to resist two moments of brilliance from Isco.
Madrid, who handed Achraf Hakimi a debut at right-back with Dani Carvajal sidelined by a viral pericardium infection, started at a blistering pace and should have been ahead after just 24 seconds.
Isco ghosted in behind Espanyol's defence to latch onto Sergio Ramos' searching ball, but his effort was too close to Pau Lopez, who duly parried away.
Isco was involved again when his long-range shot was comfortably gathered by Lopez, before Marco Asensio scuffed wide from a corner.
Ramos was denied an opener midway through the first half as Lopez pawed away his thundering header from Ronaldo's clipped cross.
Ronaldo then laid on the opener in the 30th minute. The Portuguese superstar picked the ball up 30 yards from goal and played a clinical through ball for Isco, who cleverly prodded past Lopez before he had a chance to set himself.
Ronaldo squandered two golden opportunities to add to the lead before half-time. First, a crisp left-foot volley arrowed just over the bar and then Lopez got down well to smother the 32-year-old's effort after he expertly controlled a long ball over the top with his chest.
The visitors offered almost nothing going forward in the opening period, but came agonisingly close to levelling just before the break when Gerard Moreno crashed a shot against Keylor Navas' post.
Buoyed by that chance, Espanyol started the second period in a positive fashion with Navas alert to keep out Mario Hermoso's drilled effort.
The visitors continued to press for an equaliser and they were left exposed in the 71st minute as a devastating Madrid counter-attack produced the second goal.
Ronaldo was instrumental again as his surging run created the space for Isco – who started the move by winning possession – to collect Asensio's pass and slide into the bottom corner past Lopez.
Substitute Lucas Vazquez nearly made it three late on as he stretched to meet Ronaldo's teasing cross, but it would have been harsh on an Espanyol side who acquitted themselves well.
