The Prince of Wales said his new title was a “very great honour”.
As part of the ceremony, he took a sip from a cup of special kava, known as Royal Kava, which was last consumed when his father, the Duke of Edinburgh visited the island in 1974.
Prince Phillip is worshipped as a god by one Vanuatu tribe.
LThe visit came on the fourth day of his week-long tour of Australia where, joined by the Duchess of Cornwall for the first three days, he opened the Commonwealth Games.
In the tradition of the Malvatumauri Council of Chiefs, the heir to the throne took part in a series of rituals before being given the high chief name of Mal Menaringmanu.
Greeting crowds of thousands, he said: “Halo yufala euriwan”, meaning “hello everybody”.
“I’m truly touched by the generous welcome shown to me today and by the very great honour you have bestowed on me in granting me the chiefly title,” he said.
He added: “Vanuatu, you are number one!”
Hundreds of islanders lined the streets to welcome the prince in Port Vila.
He was greeted by traditional dancers and presented with a garland of flowers as he met the president of Vanuatu, Tallis Obed Moses.
The prince also met Jimmy Joseph, from the village of Yaohnanen, on the Vanuatuan island of Tanna, where the Duke of Edinburgh is revered as a divine being.
“I gave him a walking stick for his father made by the hands of the Prince Philip Movement,” Mr Joseph said.
“I told him a lot of people in the movement have now died but there are some still living. The prince said he would deliver the message personally.”
Later, Prince Charles visited a local market where he bought a bag and a hat for his wife, the Duchess of Cornwall.
He also visited Port Vila Central Hospital where he praised the “fantastic” recovery effort following the devastation caused by tropical cyclone Pam in 2015.
Earlier on the tour, the prince joked about his upcoming 70th birthday, this November.
“I do know only too well – and understand – the strange feeling of disbelief that this is actually happening and that never again, for instance, will it be possible to squeeze into a pair of budgie smugglers,” he told a reception in Brisbane.
“I don’t know about you, ladies and gentlemen, but now bits of me keep falling off at regular intervals.
“‘Don’t worry’, they keep telling me, ‘you have brilliant genes’. But the trouble is I can’t even get into them either.”>
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