The Brit, fighting in his homeland for the first time since 2013, put the 33-year-old down after catching him with a sharp right-left combination only 13 seconds in.
Amir Khan made his return on Saturday (April 21), after a almost two-year layoff.
It was Khan's first fight in two years.
Lo Greco got back to his feet, but then fell into another bought of punches from Khan before collapsing by the ropes, leading Victor Loughlin to call the fight 40 seconds in.
Khan had not fought since a knockout loss to Saul "Canelo" Alvarez in May 2016, but showed no lingering mental scars as he ruthlessly attacked Lo Greco from the opening bell.
Lo Greco (28-4) was knocked out for only the second time in his career.
In January, at a pre-fight promotional event, Lo Greco pointed to Khan's family issues and marital difficulties. "My target is to win another world title", Khan was quoted as saying by ESPN after his win. I'm back with a bang.
Khan told Sky Sports: "People wanted to see me come back and I wanted to prove a point". This is where me and Eddie need to sit down with Kell's team.
"He's just run off, he doesn't want the fight". I'm not a fighter to run away. "I want to fight the top guys, I want to win another world title", he added. I want the fight.
"All the fans want the fight. I came and signed with Matchroom, I'm the one chasing Kell".
"I'm just going to wait and see because it's always changing".
The 31-year-old has been linked with a lucrative domestic super-fight against Kell Brook for years and after signing with Brook's promoter, Matchroom Sports, on his comeback, it seems nearly inevitable.
Hearn wants to make Khan-Brook for late 2018 at the Manchester Arena.