She is currently on a punishing European tour and flew in overnight for two Gulf performances in separate 24,000- and 8,000-seater venues. The second show is on Saturday.
The singer appeared before a massive audience on Wednesday night in the Gulf state - about 150 kilometres (100 miles) from Iran on the Arabian side of the Gulf waters.
"I feel I'm singing for my people and I'm singing in my country. It's the closest to home," she said ahead of the performance.
The concert fell on the Iranian new year celebration of Norouz, as well as marking the diva's own 50th birthday.
She is currently on a punishing European tour and flew in overnight for two Gulf performances in separate 24,000- and 8,000-seater venues. The second show is on Saturday.
Organisers said about 70% of the Dubai audience flew in from Iran.
"I want to give the same [love] back to them and sing with all my power. When I am on the stage, I give my feeling to them," said Googoosh.
Long-awaited event
BBC Gulf correspondent Julia Wheeler says the singer is a living legend to Iranians of all ages.
During her years of silence, a whole generation of Iranians grew up hearing their parents talk about Googoosh as if she were a fairy-tale character.
And many thought a Googoosh concert was a spectacle they would never experience, something that would never happen.
Reformist Iranian President Mohammed Khatami recently lifted a travel ban on the singer.
Googoosh went on tour to the US and Canada, attracting huge numbers of Iranian expatriates.
The organisers of the Dubai concerts say they have also sold tickets to people across West and South Asia, as well as to Arabs.
The tickets have not been cheap - VIP seats were on sale for about $1,300.
