Prime Minister Malcolm Turnbull was among those who laid a wreath near a cafe where the shooting unfolded 20 years ago.
Thirty-five people were killed and 23 wounded by a gunman armed with a semi-automatic rifle on April 28, 1996.
On Thursday, some 500 people gathered at the Port Arthur Historic Site for the official memorial service.
Mr Turnbull reflected on the shock experienced by Australians, especially visitors to Port Arthur, 20 years ago.
"Some came to work, some came to relax and learn. It was to be another calm day amid the sandstone ruins," he said of those at the historic site that day.
"And then the horror.
"Despite the years, despite the healing, the sense of loss weighs heavy. We will never be the same."
Mr Turnbull acknowledged his coalition predecessor John Howard who he said "acted decisively" to tighten gun laws.
"(He) set a benchmark in our resolve," Mr Turnbull said.
He said his government would continue to crack down on gun crime and illegal gun ownership.
Family and community members lay 35 floral tributes in the Memorial Pool to remember the victims (Getty) Source: Getty Images
Port Arthur Historic Site Management Authority chairwoman Sharon Sullivan explained that while there are people who opposed the idea of holding an event for the 20th anniversary, it was important for many people.
"There are some people affected by the tragedy who have come back to Port Arthur for the first time in 20 years," Professor Sullivan said.
"That is incredibly gratifying for us.
"We also understand there are some people who cannot bear to return and perhaps never will."
A family stands at the memorial pool, with the Broad Arrow cafe behind them during the 20th anniversary commemoration service (Getty) Source: Getty Images
Port Arthur's history as a convict settlement in the 1800s had a new layer of disbelief, sadness, fear and trauma added in 1996, Tasmanian Governor Kate Warner said.
"The gunman seemed to have no comprehensible explanation for his actions," she said, before acknowledging the subsequent gun reforms.
The events of 20 years ago took a punishing toll on the local community, Prof Warner added.
"For many, the pain and anguish will never end."
Organisers of a commemorative service marking 20 years since the Port Arthur massacre worked to shield survivors, family and friends from a media throng.
The former convict settlement is being divided into distinct areas where attendees can get moments of quiet reflection during official proceedings which will be attended by guests expected to include Prime Minister Malcolm Turnbull.
Port Arthur Historic Site Management Authority boss Stephen Large says the 10th anniversary in 2006 was to have been the last marked by a special event but plans changed.
"Last June, we were approached by somebody that lost his wife in the massacre and said he was inquiring as to what we were intending to do for the 20th anniversary," Mr Large told ABC online on Wednesday.
"He wasn't ready to come back for the 10th anniversary but felt ready now."
Further investigations found strong community interest in an event to remember the sunny Sunday 35 people were killed and 23 were injured by an armed gunman.