The bout between Pereira and Prochazka had been billed by critics as an exciting clash of cultures, with Prochazka practising bushido - the moral code followed by Japanese samurai - and Pereira embodying the spirit of his tribal ancestors in Brazil.
Prochazka was hoping to regain the belt he vacated one year ago through injury while Pereira was fighting for just the second time in the division.
The pair engaged in an intense stare-down as they faced off inside the octagon before Pereira took the early initiative in the fight, displaying his formidable leg-kicking technique by dropping Prochazka.
The Czech fighter would bounce back however, taking Pereira down to secure control time on the canvas.
The fight-ending moment came in the second round as Pereira, appearing to be hurt, backed towards the cage.
As Prochazka closed the distance, Pereira unleashed a right hand and a trademark left hook which dropped his opponent, before the referee stepped in to end the contest with Pereira landing a number of follow-up hammer-fists.
"I'm not surprised [it was stopped] after the first left hook, he fell to my legs and I don't think it was a bad stoppage," said Pereira.
"It's a great honour for me, especially to do this in Madison Square Garden. This means a lot to me and to my family."
Pereira also called out long-time foe and former middleweight champion Israel Adesanya in his post-fight interview, with a future bout against ex-light heavyweight champion Jamahal Hill also a possibility.
Like Prochazka, Hill vacated the title he won in January earlier this year because of injury.
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