Flight MU736 was heading from Sydney, Australia to Shanghai, but the pilot reported problems with the engine about one hour after taking off.
Passengers, who had to spend the night in Sydney, told media they smelled burning inside the aircraft.
The Airbus A330 landed safely and there were no reports of injuries.
Images circulating on social media showed a large hole in the engine casing.
One passenger told Australia's Seven News network: "All of a sudden we heard this noise... it kind of smelt like burning".
"I was really scared. Our group was terrified."
ABC News quoted a spokeswoman for China Eastern Airlines as saying the crew had "observed the abnormal situation of the left engine and decided to return to Sydney airport immediately".
Aviation safety authorities are now investigating
[BBC Sources]
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