At 4:30 pm (1430 GMT) -- the moment the bombing began 80 years ago -- representatives of victims associations laid floral wreaths at a monument in the Zollo cemetery dedicated to those killed in an attack that inspired Pablo Picasso's famed "Guernica" painting.
"A rain of fire, blood and death fell upon us," Luis Iriondo, a 94-year-old survivor of the air raid, told the gathering.
He also appealed for the end of bombings in Syria and other war zones around the world.
People hold candles during a ceremonial march to commemorate the 80th aniversary of the bombing. Photo; Anders Gillena / AFP
Aircraft from Adolf Hitler's "Condor Legion" sent to Spain to support General Francisco Franco's nationalist forces carpet-bombed the town on the afternoon of April 26, 1937 for over three hours.
Historians estimate the air raid killed between 150 and 300 people, many of them attending a weekly market in the centre of the town.
It was one of the first-ever carpet bombing raids on a civilian centre, an atrocity that shocked the world and was immortalised in Picasso's haunting anti-war painting that year.
"I think it is a duty to come for those who live here," Nieves Onaindia, a 63-year-old teacher from a nearby village, told AFP.
"It is important that we remember for future generations, so that this sort of thing doesn't happen again," she added.
Rosi Nebreda, 88, hid in a shelter with her sisters and mother on the day of the bombing.
"When we came out, all of Guernica was burning," she told AFP.
Archbishop of Nagasaki, Bishop Takami Mitsuaki (L) and nazi air raid survivor Luis Iriondo during the ceremony at the Zollo cemetary: Photo: Ander Gillenea / AFP
Earlier on Wednesday air raid sirens sounded across Guernica, home to 17,000 people, at the same time that the first planes were spotted over the town 80 years ago.
Guernica's city hall has organised a week of activities to mark the anniversary of the bombing, including conferences on the topic of peace and refugees.
The town also awarded a peace prize to Colombian President Juan Manuel Santos and FARC rebel leader Rodrigo Londono.
The two men -- who were not in Guernica to collect the award -- signed a peace deal last year to end a half-century war that killed a quarter of a million people and once took Colombia to the brink of collapse.
Since the bombing, Guernica has become a symbol for peace.
The town has a peace museum and a peace park, and survivors of the air raid have joined forces with others from Dresden in Germany and Hiroshima in Japan to campaign against war.
By Adrien Vicente / AFP