Pavarotti's coffin was covered in his favourite sunflowers
Applause rang out inside the cathedral in his home town of Modena as a recording of a duet the tenor sang with his father was played.
Among the thousands of mourners were stars such as U2's Bono and the tenors Placido Domingo and Jose Carreras.
Pavarotti died on Thursday aged 71, after a long battle against cancer.
The Roman Catholic service culminated in a recording of Pavarotti's famous rendition of Nessun Dorma and a fly-past by the Italian air force.
The singer was then to be buried in a private ceremony at the Montale Rangone cemetery near Modena, alongside members of his family, including his parents and stillborn son Riccardo.
Luciano Pavarotti had been suffering from pancreatic cancer
It was also broadcast live on Italian state television and the internet.
The requiem mass was attended by Italian Prime Minister Romano Prodi and former UN Secretary-General Kofi Annan and celebrated by Modena's Archbishop, Benito Cocchi.
It began with a moving rendition of Verdi's Ave Maria by Bulgarian-born soprano Raina Kabaivanska, also a resident of Modena who had worked with Pavarotti.
It was followed by a tribute to Pavarotti from Archbishop Cocchi. "The death of Pavarotti has made us feel poorer," he said.
Italian tenor Andrea Bocelli sang Mozart's Ave Verum Corpus, and flutist Andrea Griminelli performed.
Pavarotti's white maple casket, covered in his favourite sunflowers lay before the altar, with his wife Nicoletta Mantovani, looking on. Sitting nearby were Pavarotti's three daughters from his first marriage.
A message from Pavarotti's four-year-old daughter, Alice, was read during the service.
"Papa, you have loved me so much, I know you will always protect me. I will hold you dear to my child's heart every tomorrow," it said.
Pavarotti's family had expressed a desire for a private ceremony, but with the attendance of fans, celebrities and politicians, it took on the look and feel of a state event.
Archbishop Cocchi said the presence of so many dignitaries at the funeral was a sign "of the esteem, of the affection and of the gratitude that universally surrounds the great artist".
Pavarotti's widow listened as her daughter's message was read
The Italian air force's Frecce Tricolori display team created the green, red and white of the country's flag when it passed over Modena cathedral as the tenor's coffin was brought out at the end of the service.
Modena city officials have estimated that 100,000 people came to pay tribute to Pavarotti and view his coffin since was brought to the cathedral on Thursday night.
Admirers signed books of condolence placed by vases of sunflowers outside the cathedral.
The foreign ministry said similar books would be available for well-wishers at Italian embassies and consulates around the world.
The Cathedral at Modena 
The family and friends of the world-famous opera singer Luciano Pavarotti have gathered in his hometown of Modena, Italy to pay their final respects. Pavarotti died on Thursday of complication from pancreatic cancer at the age of 71.

The Roman Catholic service at the cathedral in Modena was attended by such international stars as fellow tenors Plácido Domingo and José Carreras, as well as U2's Bono. It included Mozart's ''Ave Verum Corpus'', Giuseppe Verdi's ''Ave Maria'' and a message of condolence from Pope Benedict XVI, who said Pavarotti had "honored the divine gift of music through his extraordinary interpretative talent". 

At least 800 people were present in the cathedral, but thousands gathered outside to watch the service on a television screen placed in Modena's main square. The service was also shown on Italian state television and via the Internet. 

A recording of Pavarotti's famous duet with his father in 1978 was played and prompted a standing ovation of the crowd inside and outside the cathedral, and Italy's air force gave a flyover releasing smoke in the colours of the Italian flag. It is estimated that over 100,000 people have seen Pavarotti's casket in the past two days, where it has been publicly displayed in Modena's main piazza, to many of Pavarotti's recordings and appearances shown on the public screen. Pavarotti will be buried in his family plot in a private ceremony at the Montale Rangone cemetery near Modena.