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Cotto, who pummeled Antonio Margarito at Madison Square Garden in December, was praised as a robust opponent.
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He out-boxed the taller Margarito through the early rounds, frequently landing a series of punches before dancing away from danger.
BBC: Margarito ends Cotto unbeaten run
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In the seventh round a pair of Margarito upper-cuts found their mark and rattled Cotto, who began to bleed from his nose.
BBC: Margarito ends Cotto unbeaten run
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Antonio Margarito World Super Welterweight Championship for the week leading up to November 12, which will be broadcast live on HBO PPV.
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Margarito continued to chase his opponent down and inflicted further damage towards the end of the 10th round, sending Cotto back to his corner clearly exhausted.
BBC: Margarito ends Cotto unbeaten run
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But Margarito, four inches taller than his opponent, continued to stalk Cotto and eventually began to wear down the smaller man by trapping him against the ropes.
BBC: Margarito ends Cotto unbeaten run
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Margarito finally forced Cotto to his knee after a hard combination and then continued to unload as his opponent staggered around the ring, finally going down a second time as the towel flew in.
BBC: Margarito ends Cotto unbeaten run
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" He called the treatment of Margarito "unfair.
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Saturday's Cotto-Margarito rematch at the remodeled Garden offers the backdrop of bad blood (Cotto lost in 11 rounds in 2008) and a lingering controversy the revocation of Margarito's boxing license in California after a sticky substance was found on the hand wraps he used in a 2009 fight with Shane Mosley.
WSJ: Jason Gay: Taking a Ride With Boxing's Big Cheese