Manny Pacquiao beat Vargas in only his second fight since his defeat by Floyd Mayweather in October 2015. Photo: Getty Images

Former eight-division world champion Pacquiao, 37, had announced his retirement after beating Timothy Bradley in April.

The judges scored the bout 114-113, 118-109 and 118-109 in favour of the veteran Filipino.

His former world title rival Floyd Mayweather Jr had a ringside seat.

"Not bad," Mayweather said, giving Pacquiao a thumbs up after the fight.

Mayweather beat Pacquiao to become the undisputed welterweight champion in May 2015 in what was billed as "the fight of the century".

"I invited him to be here tonight,'' Pacquiao said. When asked if the two could meet again, he replied: "We'll see."

Pacquiao returned to what he called his "passion" after quitting boxing to win election to the senate in the Philippines.

Despite giving away 10 years to his opponent, Pacquiao fought with more intensity and energy.

Pacquiao pressed the fight from the opening bell, trying to score a knockdown. He looked as if he would when he caught Vargas with a straight left that put him on the canvas in the second, but Vargas got up quickly.

Vargas had difficulty dealing with Pacquiao's speed, but was more than willing to trade punches to try to lure him into a brawl.

He succeeded in the eighth, but came off worse when he suffered a cut in an accidental clash of heads. Pacquiao increasingly dominated in the final rounds to close out an emphatic victory.

"I feel I could have done more but every round I tried to knock him out," Pacquiao said.