Donning a grass skirt and a white garland, the heir to the throne was made a high chief in a colourful ceremony on Saturday.
In the tradition of the Malvatumauri Council of Chiefs, Charles took part in a series of rituals as he was given the high chief name of Mal Menaringmanu.
The prince also took a sip from a cup of special kava, known as Royal Kava, before planting two trees.
The drink is reserved for special occasions and was only last consumed when the Duke of Edinburgh visited the island in 1974.
Delighting the crowds - who had turned out in their thousands - with the traditional greeting of "Halo yufala euriwan", meaning "hello everybody", he said: "My visit, while far too brief, has nevertheless allowed me to experience for myself the warmth, generosity and spirit for which the people of Vanuatu are so justly famed."
He added: "Vanuatu, you are number one!"
Earlier, Charles had received a welcome befitting for an heir to the throne as he landed on the island at Port Vila.
Greeted by the locals in traditional dress and with painted faces, the prince smiled and waved as he walked across red ceremonial mats - one of the most deeply respected aspects of Vanuatu's traditions.
After meeting with Vanuatu's president and being given the first of many traditional garlands, it was time for a spot of shopping, as Charles picked up a hat and a bag for wife Camilla at a handicraft market.
"They make such wonderful gifts, don't they," he said, as he snapped them up for 6000 vatu ($A72).
Charles spent a while strolling through the Haos blong Handikraf market, admiring locally made products such as paintings, wooden sculptures and woven baskets.
Charles was accompanied by Australian Foreign Minister Julie Bishop when he visited Port Vila Central Hospital, which suffered extensive damage when tropical cyclone Pam hit in 2015, and praised the "fantastic" recovery effort funded by the Australian government, including the refurbishment of operating theatres and the laboratory.
The day trip to the South Pacific island came on the fourth day of his week-long tour of Australia, the first three days of which he was joined by the Duchess of Cornwall.
He will now fly on to Cairns before finishing his trip in Darwin.
