The 58-tonne middle section of the funeral stone was returned from Rome to the northern Ethiopian town of Axum at sunrise in a cargo plane and was greeted by Ethiopians chanting prayers and weeping with joy.
Axum, now a town of 60,000 people, is the former centre of the once powerful Axumite kingdom that lasted from just before the time of the birth of Jesus until the 12th century.
The 24-metre (80ft) high stone, which is seen as an important national symbol in Ethiopia, was taken in 1937 on the orders of Mussolini. Its return ends a dispute that has raged since 1947, when Italy signed a pledge to the United Nations to give back all the property plundered from Ethiopia
The stone will remain under armed guard at Axum's airport until its two remaining pieces are flown in from Rome later this month as part of a £4m restoration project. When all the pieces have arrived, they will be transported on trucks to a final resting place three miles away. The reassembled funeral stone will then be erected alongside six other obelisks that once dominated the skyline of the Axum empire.
Officials said the return of the stones could set a precedent for the return of other sacred Ethiopian objects and ancient artefacts that were looted by British troops and later locked up in British museums, royal palaces and private collections.
As the obelisk was unloaded, Giorgio Croci, professor of engineering for ancient monuments at the University of Rome, said: "Inevitably this could open the floodgates. This is a part of the Ethiopian culture and history and we realise how important it is to this country and its people."
Pealing bells and chanting priests from the town's St Mariam cathedral also greeted the arrival of the first piece of the monolith, which dates back to the third century, predating the arrival of Christianity in Ethiopia. Netsannet Asfew, state minister for information, who was one of the officials who received the monument, said: "We have waited a long, long time for this. This is a proud moment for us."
When it was removed by the Italians, the obelisk was in fragments, having been toppled during a 16th century Muslim rebellion. The weight of the fragments pushed the limits of military vehicles and makeshift roads and bridges built by the Italians. Once in Rome, it was restored with metal rods embedded in concrete. The restoration made it difficult to disassemble, but the obelisk was dismantled at the end of 2003 from where it stood near the Circus Maximus in central Rome.
The Ethiopians are delighted at the return of the monument but there is a chance it is not the most town's most celebrated treasure. Axum's Church of Our Lady Mary of Zion claims to have the biblical ark of the covenant, although most western historians are sceptical of this claim.