Dominik Meichtry of Switzerland led the way in 1:45.80. Jean Basson of South Africa was second-quickest in 1:46.31, followed by Canadian Brent Hayden.
American Peter Vanderkaay also moved on to Monday's semifinals.
Earlier, Phelps got one of his toughest races out of the way, and it couldn't have been any easier.
With President Bush cheering him on, Phelps dominated his first event of the Beijing Olympics on Sunday morning, crushing his own world record and all hopes of his challengers with a mark of 4 minutes, 3.84 seconds in the 400-meter individual medley.
This was thought to be a potential stumbling block in Phelps' quest to win eight gold medals after fellow American and good friend Ryan Lochte matched him stroke for stroke at the U.S. Olympic trials just over a month ago. Both went under the previous world record in the 400 IM then, with Phelps touching first in 4:05.25.
But Phelps beat Lochte when it really mattered. Laszlo Cseh of Hungary took the silver in 4:06.16, while Lochte faded to third in 4:08.09 - more than 4 seconds behind the amazing Phelps.
"I'm pretty happy. That was a pretty emotional race," Phelps said. "I knew it was going to be a tough race all the way through."
Well, it was for a while.
The top three traded the lead over the butterfly and backstroke legs. Cseh got off to a quick start, touching the first wall just ahead of Phelps, and Lochte claimed the lead midway through the back.
Phelps had a slight lead at the 200 mark, and it began turning into a blowout from there.
"Looking and seeing all three of us together pretty much at the 200, I wasn't really comfortable with having that close of a race," Phelps said. "I usually have more of a gap, but it made my breaststroke a lot stronger."
No one was catching Phelps in the freestyle. He stretched his lead and powered to the wall with nearly his entire body in front of the world-record line - a extremely fast and held on at the end to win the women's 400 IM in 4:29.45 - nearly 2 seconds faster than the world record of 4:31.12 set by Katie Hoff at the U.S. Olympic trials.
"I sort of turned around and thought I saw 4:31 and I was thinking, 'That hurt a lot for a 4:31,"' Rice said. "But when I walked over and saw the 4:29, I thought, 'That's amazing."'
Kirsty Coventry of Zimbabwe also went under the old mark, but only got the silver for the second-fastest swim in history, 4:29.89. Hoff couldn't match her performance at the trials, settling for bronze in 4:31.71.
"It was a tough race, but I can't really be mad," Hoff said. "I was only like a half-second off my best time, so I'm happy to get my first medal of the Olympics."
She was a frightened 15-year-old when she competed at her first Olympics in Athens, actually throwing up after her first event. She failed to win a medal in either of her two races.
This time, nerves weren't a problem. She simply couldn't keep up with Rice.
"I was trying," Hoff said. "I didn't have it at the end."
The team from Down Under didn't fare as well in the men's 400 freestyle. Park Tae-hwan of South Korea won the gold medal, snapping Australia's dominance of the event at the Olympics.
Park, the current world champion, touched in 3:41.86. Zhang Lin of China earned his country's first swimming medal of the games, claiming silver in 3:42.78. American Larsen Jensen took the bronze in 3:42.78.
Favored Aussie Grant Hackett, who was in the lead off the blocks, struggled home in sixth. He was second four years ago to countryman Ian Thorpe, who won the second of two straight golds in the event. Hackett will get a chance to make up for it in his best event, the 1,500 free.
