The Londoner maintained his unbeaten record as he produced an emphatic finish on the undercard of the Robert Guerrero-Selcuk Aydin fight at the HP Pavilion.
Groves did the damage with a fine combination of punches that floored his opponent, a right finally stopping Sierra in his tracks before a superb left sent the South American tumbling back onto the canvas.
Sierra somehow managed to get up from such a heavy knockdown but when he again took further punishment, his corner quickly threw in the towel.
The win means Groves is now 15-0 as a pro, though he was made to work hard to remain perfect against a tall, dangerous opponent who clearly possessed plenty of power himself.
Although wild and upright, Sierra - who boasted 22 knockout wins on his 32-fight record - did catch the British fighter with some heavy punches, including a body shot that briefly seemed to force Groves to take a step back.
The 24-year-old from Hammersmith was also hampered by a cut following a clash of heads in the third, with the doctor asked to take a look between rounds due to concerns over his visibility.
Thankfully the flow of blood was able to be stemmed by his corner, though the wound will put into doubt Groves' scheduled fight with Scotsman Kenny Anderson, a rematch of their 2010 clash that the former won, on September 14.
As for the main event, Guerrero marked his move up to welterweight with a unanimous points win over German-based Turk Aydin, two judges giving 'The Ghost' the nod 116-112, with the other scoring it 117-111.