The fight, which headlined the FOX Sports 2-televised event, took place at Phones4u Arena in Manchester, England.
It was a huge win for Machida, and the stoppage came at the 3:10 mark of the scheduled five-rounder's opening frame.
Machida admits it was difficult fighting Munoz, who he considers a good friend. He says his friendship with Munoz will continue now that the fight is over.
"It was very hard for me (to take the fight) because Mark is a good friend of mine," said Machida, who immediately checked on Munoz and embraced him after the victory. "But you know, as a professional, I don't think about that and just do my job. But now that it's over, the friendship will continue."
Machida showed great sportsmanship by refraining from throwing an unnecessary knockout punch after landing a head kick on Munoz.
"I'm staying at 185, but my bosses, Dana White and Lorenzo Fertitta, they [decide] everything," Machida said. "If they ask me to fight at 205 again, I'll do that."
For Machida, it was his first bout in the 185-pound weight class. He had previously competed solely in the UFC's light heavyweight division.
In other UFC Fight Night 30 action, Melvin Guillard vs Ross Pearson was declared a no-contest due to an accidental knee in the first round.
Also on the main card, Jimi Manuwa defeated Ryan Jimmo after the latter injured his leg.