In the fourth round a double left hook again left Billy shaken, throwing in the towel to end the contest at King Abdullah Sports City.
After the fight, Khan expressed his desire to fight former four-weight world champion Manny Pacquiao next.
During the fourth, Khan battered Dib with a variety of punches to send him down for a second time and this time Dib's corner threw in the towel.
Ahead of the 'Red Sea Fight Night' extravaganza held during Jeddah Seasons, Khan wore the traditional Saudi male attire called the Thobe as he went for a walk by the Red Sea coast.
Khan, who suffered a controversial defeat to Terence Crawford in April, said that he felt "very comfortable" in the fight against Dib.
Dib, 33, has won a world featherweight strap but stepped up in weight at late notice after Indian boxer Neeraj Goyat withdrew following a vehicle crash.More news: Amazon Prime Day Becomes a Phenomenon as Rivals Jump In
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Dib was announced as the replacement for Goyat but he proved to be an easy opponent for Amir as the Brit downed the Australian in just the second round with vicious left hook.
And it is someone who will pose a much bigger threat than vastly outclassed usual super-featherweight Dib.
Khan said: "We want the Manny Pacquiao fight".
Khan reunited with strength and conditioning coach Alex Ariza for this fight and hired new trainer former world champion Bones Adams.
"We had to work on a strategy, I slowed myself down a little bit instead of rushing all the time". I think whenever I fight I always make it very exciting - the people here love a fight.
Khan will now watch Pacquiao take on Keith Thurman next weekend in Las Vegas, knowing he has kept up his side of the bargain in their potential deal.