The Mavericks great helped unveil Nowitzki Way next to American Airlines Center during an emotional ceremony. The Dallas City Council approved the name change earlier in the year.
"This is, of course, a super special day," Nowitzki said at the event. "I'm super humbled and this honor is beyond the Mavs. It's a little bit bigger than basketball. This is about my relationship with the city, with this community. That's really what this is about to me.
"I also think this is for my family, and I wanted my family name to be represented. I want my parents to see this one day and be proud. I want my kids and my wife to see it and be proud one day."
Nowitzki, 41, retired after the conclusion of last season, his 21st with the Mavericks. The 14-time All-Star selection helped the franchise win its only NBA championship in 2011, when he was named NBA Finals MVP.
Nowitzki, who was born in Germany, left the game as the highest-scoring foreign-born player in league history. He was the NBA's Most Valuable Player in 2007 and was named to the All-NBA first team on four occasions.