"U-S-A, U-S-A," chanted thousands waving U.S. flags as the parade moved north from lower Manhattan, cheered by a crowd thick with girls decked out in soccer socks and star-spangled headbands.
The parade ended at City Hall, where Mayor Bill de Blasio handed each player a symbolic key to the city in a ceremony punctuated with more cheering and red, white and blue confetti.
"When they brought home that trophy, they also brought a message about the power of women," de Blasio said.
The U.S. women's all-time leading goalscorer, Abby Wambach, gathered her teammates and they lifted the World Cup trophy on the outdoor stage. Head coach Jill Ellis and other team staff were also honoured.
"This will absolutely go down as one of, if not the best, things I've ever been a part of," Wambach said.
The victorious women's team joins the ranks of Apollo astronauts, foreign monarchs and baseball's New York Yankees in being honoured with a parade and a granite marker on Broadway in lower Manhattan.
The United States defeated Japan 5-2 in the FIFA Women's World Cup final on Sunday in Vancouver, Canada, the third time the U.S. women have won the title of world champions.
While watching the parade, a group of self-proclaimed soccer moms from East Brunswick, New Jersey, hometown of U.S. midfielder Heather O'Reilly, said the next hurdle for women athletes is equal pay.
"Parade first, then the money," said Lynne Dunbar, 62.
Next week in Congress, U.S. Senator Patrick Leahy of Vermont will introduce a resolution calling on the Fédération Internationale de Football Association (FIFA) to immediately eliminate gender pay inequity between men and women athletes.
The last woman athlete to be honoured with a ticker tape parade was Olympic figure skating champion Carol Heiss Jenkins in 1960.
The New York tradition began in 1886, when people who worked in skyscrapers threw ticker tape - ribbons of white paper on which stock information was recorded in those days - onto a parade celebrating the dedication of the Statue of Liberty.
With stock information now computerized, ticker tape has been replaced with shredded office paper and confetti. On Thursday, the Downtown Alliance neighbourhood group delivered about two tons of shredded paper to more than 50 buildings and tenants along the parade route, a fraction of which was used.
(Additional reporting by Barbara Goldberg; Editing by Lisa Lambert and Grant McCool)
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