It had got as far as Cheshire minutes into take-off shortly before 1pm when an emergency was declared and it returned to Liverpool John Lennon Airport 35 minutes later.
Air traffic websites showed the Airbus A320 turning around over the Irish Sea before looping in land as it reportedly dumped fuel.
People on the ground who heard it fly over described the sound as "horrendous" and speculated that only one engine was working.
Passenger Jan Nethercote told the Liverpool Echo they had been in the air for around 20 minutes when an announcement came over the tannoy.
"They told us a minor fault had happened with one of the engines and they were taking us back to Liverpool," she added.
"It was explained to us later the fault happened at take off but they made the decision to continue. However it developed into something more serious and in the end it looks like they lost the use of an engine."
An easyJet spokesperson confirmed that an "electrical fault" had been reported on the aircraft but did not give further details.
Ambulances, fire engines and police were seen arriving at Liverpool Airport as the plane descended but staff said the response was an automatic procedure for alerts of that kind. Flightradar24 data showed the plane was only minutes into its journey when it had to divert
On Twitter, airport staff said flight EZY7045, also listed as U27045, had landed after a "technical fault" and all passengers had safely disembarked.
A spokesperson for the airline said: “The Captain took the decision as a precaution due to an electrical fault.
“The flight landed safely and passengers disembarked as normal and will continue their journey on a replacement aircraft.
“The safety and well-being of our passengers and crew is always easyJet’s highest priority.
“We would like to thank passengers for their patience and apologise for any inconvenience caused.”
A replacement flight due to take the travellers to Charles de Gaulle airport was due to take off at 4.05pm.