The Australian, ranked 24th in the world, had not played a singles Tour match in just over two months since defeat in Houston after resting an elbow injury and showed positive signs on his comeback.
Kyrgios, after a bye in the first round, was a 6-4 4-6 6-3 winner against Maximilian Marterer to book his place in the quarter-finals of the ATP 250 tournament.
A meeting with Roger Federer in the last-four remains on the cards if Kyrgios can see off fellow seed Feliciano Lopez in the next round. The Spaniard beat Gilles Simon 7-6 (8-6) 6-4.
Tomas Berdych and Milos Raonic are also through after routine defeats of Benoit Paire and Marton Fucsovics respectively.
At the Rosmalen Grass Court Championships, meanwhile, top seed Adrian Mannarino is out after a straight sets defeat to compatriot Jeremy Chardy.
Richard Gasquet is through, though, the second seed making light work of Evgeny Donskoy 6-2 6-2.