In front of a large photo of Michael projected above the stage, John opened the show with "Don't Let the Sun Go Down On Me," which he originally recorded in 1974.
Michael and John performed the ballad together at the Live Aid concert in 1985, and at Michael's Wembley Arena concert in 1991. The duet was recorded and released at the end of 1991, and ended up topping the Billboard Hot 100 in 1992.
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Former Wham! singer and solo artist George Michael passed away on Christmas Day due to heart failure at his U.K. home. He was 53.
John tweeted a photo after the death of his friend and collaborator, writing: "I am in deep shock. I have lost a beloved friend -- the kindest, most generous soul and a brilliant artist. My heart goes out to his family, friends and all of his fans."
— Elton John (@eltonofficial) December 26, 2016
Wednesday's concert was the first in a series of four New Year's shows, called The Million Dollar Piano, that the 69-year-old entertainer is performing at Caesars Palace.
PHOTOS: Elton John and George Michael through the years