Khan, who last fought in April 2013, was looking to make a statement in the 147lb ranks as he attempts to lure pound-for-pound king Floyd Mayweather into a bout in the future.
And the 27-year-old knocked down the experienced Collazo three times in a near punch-perfect performance on the Mayweather-Marcos Maidana undercard in Las Vegas.
Two judges scored the bout 119-104 while the third had it 117-106 to reflect the dominance of Khan, whose superior hand speed proved the difference in a bout that was for the lightly-regarded WBC Silver welterweight title.
Khan (29-3, 19KOs) said in the build-up that he had used his time out of the ring by tightening up his defence under the watchful eye of trainer Virgil Hunter.
Yet it was a characteristic flurry that helped Khan take the initiative in an otherwise quiet opening round, with the 27-year-old using his significant reach advantage to keep his foe at bay.
A straight right from the Briton momentarily stunned Collazo in the second round, while Khan's blurring hand speed ensured he was constantly first to the punch.
Collazo attempted to cut off the ring but was caught out early in the fourth when he was sent crashing to the canvas after being off balance when Khan landed another straight right.
He showed no ill-effects of the knockdown and even taunted Khan as the round wore on by keeping his hands by his sides, attempting to provoke a toe-to-toe battle.
But Khan, who has been criticised in the past for a reckless attitude, refused to be sucked in and stuck to his task gamely, with his superior speed seeing him well up on points by the halfway stage.
A cut appeared above Collazo's eye at the start of the seventh and the veteran welterweight, growing increasingly frustrated, was deducted a point in the eighth for a low punch.
Yet Khan, who had barely been troubled up until that point, showed some of the old vulnerabilities after being momentarily wobbled in the same round, with the Bolton man also penalised a point for holding.
Khan responded superbly and knocked down Collazo twice in the 10th, first from a succession of body punches before a crisp one-two had the American on the floor again.
Collazo barely survived the round as Khan targeted what would have been an impressive knockout over someone who has only been stopped once in his career.
Collazo had given Khan's compatriot Ricky Hatton all he could handle before losing a tight decision eight years ago, but there would be no controversy here.
The 33-year-old from New York (35-6 18KOs) did have his opponent on the canvas in the final round although it was due to a low blow, with Khan given time to recover before comfortably seeing out the final bell.
A jubilant Khan made no attempt to hide his desire to face the unbeaten Mayweather next.
"Styles make fights and I really believe I have the style to trouble Floyd Mayweather," Khan said in his post-fight interview.
"Collazo has been beaten but it was always a really close fight (when he fought Shane) Mosley and (Andre) Berto."
Khan was also quick to pay tribute to trainer Hunter, who has now been in his corner for his last three fights.
"One thing about me training with Virgil Hunter. He taught me some things and I put them together tonight," Khan added.