Rock stars, political leaders and loved ones wept and applauded after seeing a film of Pavarotti and his father Fernando performing the hymn Panis Angelicus, giving the singer a standing ovation that lasted several minutes.
"The death of Pavarotti has made us feel poorer," says Archbishop Benito Cocchi, leading the service at the cathedral in Modena – the town where Pavarotti was born the son of a baker and died a superstar.
Fourteen pallbearers carried the coffin out of the cathedral to applause and cheers of "bravo" from the crowd as a recording of his most famous aria – "Nessun Dorma" from Puccini's "Turandot" – played over loudspeakers.
As Pavarotti sang the song's famous line "All'alba vincero'" – "At dawn I will be victorious" – the air force's aerobatics team soared above the church, marking the blue sky with green, white and red smoke forming the Italian flag.
U2 frontman Bono sat next to film director Franco Zeffirelli at the service, near Pavarotti's widow Nicoletta Mantovani, and ex-wife Adua who sat an opposite ends of the same pew.
Fifty thousand watched
About 50,000 fans in the sunlit square outside the 12th century cathedral watched the service on giant screens.
The images were broadcast live on state television and the Internet.
Bulgarian soprano Raina Kabaivanska opened the service, amid the cathedral's gilded frescos, with Ave Maria from Verdi's Otello.
Another of Pavarotti's friends, blind Italian tenor Andrea Bocelli, sang Mozart's Ave Verum Corpus.
Archbishop Cocchi remembered Pavarotti's life. "The story of a boy who had the natural gift of an exceptional voice which he cultivated with tenacity and thus became the leading figure among all the tenors of his time."
"Nessun Dorma", which has become a soccer anthem, rang out at London's Wembley Stadium today ahead of a match between England and Israel and was due to be played in Milan at a match between France and Italy as a tribute to Pavarotti.
Mr Prodi recalled the singer's role as a cultural ambassador as well as his recordings and performances to promote peace.
"He made music an instrument for life and against war.
“It's true that Luciano Pavarotti wanted to be remembered above all as a great opera singer, but we want to pay homage also to his great humanity," Mr Prodi told mourners.
Born to a local baker father and a cigar factory worker mother, Pavarotti trained as a teacher, dreamt of being a soccer star, but pursued a career in singing – a passion instilled in him by his father, a keen amateur.
Pavarotti shot to fame as an understudy in a performance of "La Boheme" at London's Covent Garden in 1963.
He went on to popularise what had been an elite art form, performing as one of the "Three Tenors" with Placido Domingo and Jose Carreras in Rome during the 1990 soccer World Cup in Italy.
"He moved me," said 51-year-old housewife Rosanna Cipriano of the singer whose generous girth and twinkly eyes were as famous as his voice.
"When he sang he touched your heart."
After an operation for pancreatic cancer last year, he had hoped to finish a world tour. He died on Thursday at the age of 71, leaving the four-year-old daughter with his second wife and three grown-up daughters from his first marriage.
Pavarotti's coffin was taken to rest at the Montale Rangone cemetery near his villa outside town, where his parents and his stillborn son Riccardo are buried.