"The moment that we took off, the wing to my left just started making a massive amount of noise and they cleared all the seats," a passenger told Nine Network.
The flight departed Sydney around 8.30pm on Sunday before experiencing problems and returned about an hour later.
The plane landed safely and passengers were evacuated with no reports of injury.
"We went up in the air and all of a sudden ... it kind of smelled like burning," another passenger told Network Seven.
Images show a huge hole in the engine casing of the Airbus A330, which was forced to circle before touching down safely.
With the majority of announcements on board made in Chinese, English-speaking passengers said they were struggling to find out any details.
"I was scared. Yes. I was really scared. Our group was terrified," the passenger told Seven.
Passengers were put up in hotels at Sydney Airport and are expected to depart for Shanghai this morning.
Despite the havoc, passengers applauded airline staff for their professionalism.
China Eastern airlines has been contacted for comment.
