People attending the ceremony observed a moment of silence in a park in the resort city of Kuta, where the names of the victims were read out, Sky News reported.
The victims were from more than 20 countries, including Australia, which lost 88 people in the worst peacetime attack on its citizens.
More than 200 people were injured.
The 2002 bombings of the Sari Club and Paddy's Bar in Kuta were by the al-Qaida-linked group Jemaah Islamiyah.
A force of 2,000 police and military personnel guarded Friday's ceremony after Indonesia issued its top alert because of a "credible" terror threat in Bali, Sky News said.
"Wounds and scars abound, healed and unhealed, but nothing can replace the empty seat at your table, the graduations and christenings you will never know and the fault lines that will always divide your lives in two halves -- before Bali and after Bali," Australian Prime Minister Julia Gillard said during the ceremony.
Commemoration services were conducted in Australia, including one at the Bali memorial near Coogee beach in Sydney's eastern suburbs, Sky News said. Among the 20 victims from that area were six members of the Coogee Dolphins, a rugby league team. The memorial is named Dolphins Point in their honor.
Indonesia earned praise for its actions after the bombings and later was lauded for its response following attacks in 2005 in which 20 people were killed on Bali.
Sky News said all of the leading Bali attackers have been executed, killed by police in raids or jailed since the 2002 bombings.