Reporting from Manila
Banario was Philippines' only hope as compatriots Geje Eustaquio, Kevin Belingon, Eduard Folayang and Rey Docyogen had earlier suffered defeats in their respective bouts at the Mall of Asia arena.
And the reigning champion was happy to oblige the 20,000 crowd as he was first to connect with a powerful right-left combination towards the end of the second minute of the first round.
However, the round was otherwise a cagey affair as both fighters' defensive tendencies rose to the fore. Their cautious approach meant that the thick of action was saved towards the end when the Filipino followed up a left hook with a fierce body kick.
And although he lost his balance a short while later, he bounced back quickly and strongly as he rushed Oishi with a barrage of punches that nearly knocked out the Japanese.
The referee had to actually pull Banario away from the 36-year-old as the Igorot was determined to kill off the fight in the first of the five rounds.
The Pancraseism fighter, who had been floored by a punch a short while earlier, was grateful that the bell came to his rescue as it gave him the time to gather his breath and revise his strategy.
He emerged in the second round in an even more cautious manner and was wary of Banario's powerful reach.
But he executed a terrific comeback at 1:35 when he blocked a jab and then sent in a well-timed right hook that knocked out the current champion.
The referee rushed to Banario's aid to prevent him from being pummeled by his opponent and called the fight.
Oishi becomes One FC's second Japanese world champion and follows in the footsteps of Shinya Aoki, who won the Lightweight belt at last month's Kings & Champions Event.