Mark Selby was also a 4-1 winner against Ali Carter in the last 16 as he set up a match with Joe Perry, who edged out Stuart Bingham 4-3.
O'Sullivan had thumped Walden 6-0 on his way to winning the Masters last month, and took just 48 minutes to overcome his fellow Englishman this time.
After picking up the first two frames, the world champion ran in 103 to leave himself on the cusp of the last eight.
Walden prevented another whitewash with an 88 in the fourth frame, but an 86 from O'Sullivan in the fifth finalised his progress in some style at a tournament that he won in 2004 and 2005.
"I just want to feel comfortable with the game and feel in control, sometimes that is more important than the scoreline," said O'Sullivan. "It is good to have hard battles as long as you are staying competitive. It is nice to win easier but nevertheless if the game is coming easy to you then it doesn't matter how many frames you have to play."
O'Sullivan's fellow multiple world champion Higgins won a tight contest with Judd Trump 4-3, but will feel he was unfortunate not to close out a 4-2 win have escaped from a snooker to knock in a brown hanging over a top pocket only to see the white follow it down the hole.
Trump cleared the final four colours to level at 3-3, but the Scotsman - who ran in 66 and 63 in pocketing the first two frames - held himself together to claim the deciding frame.
Defending champion Stephen Maguire suffered a surprise 4-3 defeat to Sheffield teenager Joel Walker. Walker, 19, will face Ding Junhui in the last eight after his 4-0 drubbing of Scott Donaldson.
In Thursday's evening matches, Marco Fu ended the hopes of Wales' double world champion Mark Williams with a 4-2 win in the last 16.
Williams won the first frame, but a 52 was not enough in the second as 76 from Fu saw the man from Hong Kong restore parity at 1-1.
Fu ran in 70 to move 2-1 ahead before Williams levelled at 2-2 aided by a 47, but he could not maintain momentum as a 103 saw Fu lead 3-2 before he won a scrappy sixth frame to complete his win. His reward is a quarter-final with Barry Hawkins, who completed a 4-2 win over Liang Wenbo.
Welsh Open latest results
Thursday 27 February
Fourth round (Last 16, best of seven frames)
Ali Carter 1-4 Mark Selby
Stuart Bingham 3-4 Joe Perry
Ricky Walden 1-4 Ronnie O'Sullivan
Stephen Maguire 3-4 Joel Walker
Scott Donaldson 0-4 Ding Junhui
Judd Trump 3-4 John Higgins
Mark Williams 2-4 Marco Fu
Liang Wenbo 2-4 Barry Hawkins
Friday 28 February
Quarter-finals (best of nine frames)
Joel Walker v Ding Junhui
John Higgins v Ronnie O'Sullivan
Fu v Barry Hawkins
Joe Perry v Mark Selby