Goals from Martyn Waghorn, Jordan Spence, Bersant Celina, David McGoldrick and Grant Ward gave Mick McCarthy’s side a thumping win, which added to the pressure on his former club.
Billy Jones and Aiden McGeady were on target for the Wearsiders but they remain in the Sky Bet Championship’s bottom three in their first season after relegation from the Premier League.
Town’s first two goals came from set-pieces and Black Cats boss Grayson, now winless in his last eight league games, said: “We gave Ipswich two easy goals and we did not do enough to stop them.
“Our players have to be organised and then we can play, but we have not done that and we are making familiar errors.
“Every time the ball went into the box they looked like they were going to score.
”It’s hugely disappointing and the performance has been a huge kick in the backside.
“We tried to make chances to make things happen but the decisions we are making are not working.
“We have got to make sure we do what is required and we have got to do it all collectively.”
Waghorn and Jones traded early goals with headers from corners but Town took control as Spence scored in similar fashion and Celina and McGoldrick made it 4-1.
McGeady’s brilliant curler gave Sunderland hope but they could make no further inroads and substitute Ward netted a late fifth after lovely work by McGoldrick.
McCarthy pleased with Tractor Boys
The 58-year-old was sacked by the Black Cats in March 2006 en route to relegation from the top flight with a then-record low of 15 points.
He said: “It was great but nothing to do with me – I don’t know quite what happened to be quite honest.
“It was lovely and I thoroughly enjoyed it. We don’t score five, do we?
“I said to the players beforehand when I saw it, I just thought Garner, Bersant, McGoldrick and Waghorn would be better than their front four and they all played very well.
“I thought (Cole Skuse) was terrific, and Tom Adeyemi. I was really pleased, it was a good performance.
“We could have had more; they blocked it on the line and the keeper has made saves. I thought it was an outstanding attacking performance.
“I try to set teams up to win all the while and to play well … it was nice and it worked tonight for us.”