Joshua had his Cameroonian opponent on the canvas in the first round and twice more in the second in a brutal and brief exhibition of punching power.
Ngannou, 37, a former UFC heavyweight champion, was taking part in only his second professional boxing match, having lost a split decision to Tyson Fury in an October fight that saw him put the WBC champion on the canvas in the third round.
"I thought this fight was something for the broadcasters to get behind," Joshua told DAZN after his quickfire victory.
"When I saw the fight with Tyson Fury, I thought, 'I want some of that'. He is a great champion and this doesn't take anything away from his capabilities.
"I told (Ngannou) not to leave boxing. He's two fights in and he fought the best."
Joshua, a former unified WBO, WBA and IBF heavyweight champion, went into the fight on the back of three successive wins.
Before that, however, he lost back-to-back fights to Oleksandr Usyk, who will take on Fury for the undisputed heavyweight title in Saudi Arabia in May.
The fight only got under way at 3:30 am local time (0030 GMT), but weary fans enjoyed a sensational start when Joshua quickly sent Ngannou to the canvas in the opening round with a brutal right to the chin.
It got worse for the Cameroonian when he was knocked down again in the second round, just managing to beat the count.
His resistance lasted only a few more moments after he was sent to the canvas again for the third and final time.
Ngannou lay on his back for some time and needed medical treatment inside the ring before being helped back to his stool.
Joshua, 34, was reportedly being paid $50 million for his clash with the MMA star, whose rags-to-riches story had captivated the sport.
Ngannou grew up in abject poverty, working as a child labourer in a sand quarry for under $2 a day.
He then made his way to Europe, even sleeping rough in a car park in Paris before a local coach took him under his wing and steered him to boxing.
Joshua's victory immediately sparked feverish talk of a mega-fight with either Usyk or Fury.
"You're looking at the number one heavyweight in the world," said promoter Eddie Hearn.
"On this form, there is no man that can beat him. Tyson Fury, please beat Usyk, because you will get the biggest fight in the history of the sport.
"He destroyed Francis Ngannou. He's a beast and I cannot wait for him to beat Tyson Fury."
Joshua's trainer Ben Davison told the BBC that "the only way to find out who is the best is to get the winner of Fury and Usyk. That's the only thing that makes sense."
However, not every ringside observer was impressed with the brief flurry of brutality.
"That highlighted what happens when a world class heavyweight has a free shot on a sitting duck," Boxing News editor Matt Christie wrote on social media platform X.
"Hopefully no need to see that kind of fight again."
He may get his wish, as Ngannou is scheduled to return to MMA later in the year.
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