The 31-year-old British boxer had not fought anywhere for two years since being beaten by Saul ‘Canelo’ Alvarez in Las Vegas in May 2016.
And the 2004 Olympic silver medallist wasted little time in sending Lo Greco tumbling with a quick one-two punch combination inside the opening 30 seconds.
Khan then pinned Lo Greco to the ropes before the super-welterweight contest ended moments after it had started.
Victory left Khan on course for his long-awaited showdown with British rival Kell Brook, who was among those watching at ringside on Saturday.
“I have been out the ring for two years but I was still in the gym working hard, I have never taken a day off. I wanted to prove a point coming back — I was trained to fight for 12 rounds, I had to make some changes and Phil lo Greco is a dangerous opponent,” Khan told the BBC.
“Enjoy my victory. Khan’s back. I was a little nervous, but I am back with a big bang. I want to become a world champion this year or next year.”
Khan, however, added: “I want to fight the best guys. If it means going up a division I will.”
As for a bout with Brook, Khan, most famous recently for his ‘jungle’ appearance in the British television show ‘I’m A Celebrity, Get Me Out of Here’, said: “That fight is something I am not rushing and not running away from. I will fight Kell Brook and beat Kell Brook. Kell Brook has been living off my name for a long time. I am a stronger fighter, a better fighter.
“I’m not a fighter to run away.”
But an unimpressed Brook said: “He doesn’t want the fight, he just ran off.
“Amir, all the fans want the fight, I want the fight, he can go in the jungle and chase stars but when he gets in there with me, I’ll make him see stars.”