The 16th seed was always going to be a tough opponent for the Englishman on clay, as he is former world number one, who has won twice here in the past, as well as being a former French Open winner.
However, for most of the first set Henman was competing gamely and even had three break points while the first set was still on serve.
A poor volley into the net in the 11th game though saw him lose his serve and Ferrero then closed out the set with ease.
Monte Carlo Masters
Nadal claims first serve the key
22/04/2007 AT 17:17
From then on in it was plain sailing for Ferrero as he broke twice in the final set to keep him on course for a potential third round clash with fourth seed Fernando Gonzalez.
It is always dangerous to play against Tim but I played well today," said Ferrero. "It was a good match and I have fond memories from Monte Carlo."
14th seed Marcos Baghdatis' poor season continued as he crashed out losing 7-5 6-4 to Max Mirnyi.
The Cypriot looked off colour throughout and despite fighting from a break back in the opening set, he then lost the 11th game of the set allow his Belarusian opponent to then serve out for the set.
Mirnyi then again broke early in the second-set and the match played out to serve meaning the doubles specialist moves on to face to Sergio Roitman or Jurgen Melzer in the next round.
David Nalbandian also looked like his was in danger of crashing out to Italian qualifier Federico Luzzi before recovering to win 3-6 6-2 6-1.
The Italian, who is ranked only 133rd in the world, played superb tennis in the first set - going 4-0 up before eventually winning it 6-3 but he seemed to use up all his energy in that one set and never looked in contention once Nalbandian got a break up in the second.
"Earlier this month I was playing the Davis Cup quarter-finals against Sweden on a very, very fast court so the start of the match was hard," Nalbandian said after the match.
"I had to adapt to clay, which explains my slow start."
Naldbandian will meet Andy Murray in the third round if both players win their second round matches.
Meanwhile, Roger Federer and Murray both learned their second round opponents.
Federer will take on Andreas Seppi who beat Teimuraz Gabashvili 6-1 6-3 while Murray will face Marc Gicquel, who came back from 2-5 down in the final set to defeat Florian Mayer 7-5 5-7 7-5.
Juan Ignacio Chela will be the next player to try and end Rafael Nadal's record unbeaten run on clay, after he defeated former French Open finalist Martin Verkerk 7-5 6-2.
Gael Monfils and Carlos Moya were both forced to retire in their matches against Radek Stepanek and Mikhail Youzhny respectively.
Monfils complained of a burning feeling down his right leg while trailing 0-6 0-2 against Stepanek, while Moya was 2-6 1-3 down to Youznhy when he left his match with thigh pains.
The crowd on centre court however, seemed to have their doubts about how injured Monfils was as they booed him off the court.
Gaston Gaudio showed flashes of the form that saw him capture the French Open in 2004 as he came from a set down to beat Dmitry Tursunov 5-7 6-2 6-2 and will now play Serbian sensation and sixth seed Novak Djokovic in the next round.
Belgium's Kristof Vliegen set up a date Marat Safin in the second round as he enjoyed a comfortable 7-5 6-3 win over Paul Henri-Mathieu.
Robin Soderling beat Olivier Rochus 6-4 6-4 and will play third seed Nikolay Davydenko next.
Russia's Igor Andreev then completed the day's action with a 6-4 6-1 win over Jose Acasuso.
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Monte Carlo Masters
Nadal wins third Monte Carlo title
22/04/2007 AT 12:17