The Filipino was in control from the outset in Macau as his speed and power left Algieri on the back foot, and the American was knocked down six times in total throughout the bout.
Pacquiao improved to 57-5-2, while it ended Algieri's record of 20 straight wins.
The judges scored the fight 119-103, 119-103 and 120-102 in an indication of how dominant 35-year-old Pacquiao was in China.
"I'm very happy [with] what I showed tonight, my performance," said Pacquiao.
"We did our best in the fight because our focus is to look for a knockout and then what happened - he didn't want to engage me in the ring, so that's why.
"But it's a good thing because I dropped him down many times."
Asked about a potential fight with Floyd Mayweather Jr, Pacquiao said: "I think I'm ready to fight him next year."
Pacquiao was the more aggressive of the pair in round one, landing several punches to Algieri's body.
Algieri went down in the second round, ruled a knockdown despite appearing to slip after a left hand from Pacquiao.
Pacquiao continued to dominate as Algieri opted for caution, but the latter may have won his first round in the fifth.
Algieri was knocked down again in the sixth – and then claimed to have slipped a second time – as Pacquiao closed in.
Already in complete control, Pacquiao landed a huge left hand in the ninth to knock down Algieri once more.
Pacquiao unloaded in the latter stages of the round on his way to victory.