There was some confusion with the referee appearing to wave the fight off as Hall got back to his feet the second time.
However, the fight was allowed to continue before Hall was knocked to the floor a third time.
Williams ended it with a searing right hook that collected Hall across the cheek.
Ringside commentators, including Australian boxing legend Danny Green, were left in awe of Williams' thunderous return to boxing.
Williams called out former rugby league international Paul Gallen after the fight and the pair spoke as Williams was walking out of the ring.
The scene has set-up a dream showdown between the two, more than 10 years after Gallen first challenged Williams to fight.
Green said during the fight: "He is annihilating Barry".
He was stunned at the manner of Williams' knockout win.
"That's unbelievable. That was incredible from Sonny Bill Williams."
Stan Sport commentator Andy Raymond said: "Sonny Bill Williams is the king".
Before the fight, Gallen gave a scathing review of SBW saying it appeared Williams had developed a "weak chin" after he made his return to boxing last year with a win over Waikato Falefehi.
Fighting for the first time in six-years, Williams was then knocked down two times in a less-than-impressive performance.
"I don't think he will last the eight rounds," Gallen told Code Combat.
"Sonny's chin's a bit suspect and I think Barry's going to go after it. He's going to look for the knockout. But I think Sonny will be fitter so if it goes past four rounds I think Sonny will win."
World title contender: trainer
Before the fight, SBW's trainer Andy Lee declared the former NRL premiership winner and Rugby World Cup champion could be turned into a world heavyweight title contender.
Williams went into the fight at 8-0 with three knockouts under his belt.
Ranked as the 13th best heavyweight in Australia, the 36-year-old's last fight was against 2-14 fighter Falefahi in Townsville last June, where he was knocked down but won the six-rounder on points.
But Williams has now dedicated himself to boxing after his football career ended and went on a six-week training camp where he sparred the likes of world champ Tyson Fury, former WBO heavyweight champ Joseph Parker and European champion Tommy McCarthy.
"It's been a pleasure to train Sonny," he said during the pair's press conference. "For a man who's achieved so much in the sport world, he's very, very hungry, very, very dedicated, almost obsessive about boxing, so it's been a pleasure to train him.
"If I showed him something this morning, by the next time we met in the gym, I could see that he worked on it, practised it and thought about it, and was already improved at doing it. That taught me all I needed to know about Sonny and how serious he is about the game.
"You might think it's crazy but my ambition for Sonny over the next few years is to build him into a world title contender and eventually fight for the world championship because that's how good he can be. He has that natural ability but you combine that with the hunger he has, I think he can go all the way."
Lee also told the Sydney Morning Herald and The Age: "Is that the greatest story in sports history if he fights for the heavyweight title?"
Hall makes big call on his boxing future
Hall admitted his boxing career would be on shaky ground if he fell to Williams.
The former Sydney Swans key forward said just hours before the fight he is under no illusions that his future depends on a victory over Williams.
His statement came after he last year signed a two-fight contract with a promotion company with one fight still yet to happen. He also said at the start of the year he wanted to fight three times in 2022.
"They're taking food off my table. That's the way I look at it," he said of Williams' camp.
"I'm trying to set up my kids' future, so like him or not, he's going to get hurt.
"At the start of the year, I wanted to have three fights, that was the plan. But it's all results based. I'm under no illusions with where I'm at and where he's at. He's a big name. If I drop this fight it's probably going to be a long road back."
Mundine's son debuts
Earlier in the night, Rahim Mundine made waves in an impressive boxing debut where he showed off incredibly similar moves to his dad, Anthony.
The son of the Australian sporting legend won by unanimous decision in his fight against Lepani Levatia on the undercard of the Williams-Hall showdown.
The 20-year-old was composed throughout the fight and also unleashed some bombs in the final round.
His speed and power left Aussie boxing legend Danny Green impressed.
"Look at that, look at that power," he said.
He also showed off a technique that had boxing commentators immediately thinking of his dad's career in the ring.
"Probably not surprising, Rahim's fighting style is identical to Anthony's," the Tim Boxeo account posted on Twitter.
"Very impressive professional debut for Rahim Mundine. Mundine had no amateur bouts prior to this debut — fighting style not surprisingly identical to father Anthony's."
Mundine was awarded the win unanimously 40-37, 40-37 and 39-37 on the judges' scorecards.
Mundine Sr, a former boxing world champion, was in his son's corner during the fight and was too nervous to speak to the host broadcaster.
"It's obviously a different nervousness. Now I know how my dad felt when I was coming through," he said. I'm very nervous. Between rounds, I was thinking about my boy."
Fight stats showed Mundine landed 34 punches to his opponent's 21.
