The 97cm by 89.5cm acrylic work Two Legends - Sir Peter Blake was unveiled by Arts Minister Chris Finlayson at the New Zealand Portrait Gallery, in Wellington, yesterday.
It depicts the scene at San Diego in 1995 when the America's Cup was held aloft by Sir Peter and claimed by New Zealand for the first time.
Mr Paton, who attended the unveiling, began the painting at the historic moment the cup was raised.
"I felt so inspired by him. He's a legendary leader.
"I love the man," Mr Paton said this week.
"It was such an incredible story.
"The fact little old tiddly New Zealand comes up with a team like that and blitzes the rest of the world."
Sir Peter was murdered on December 6, 2001 by pirates off Macapa, Brazil, while on an environmental expedition aboard Seamaster.
"That made it even more special and I really wanted to find a home for it in New Zealand where I felt it belonged," Mr Paton said.
Gallery director Avenal McKinnon had wanted to add to the gallery's collection of significant New Zealanders but had been unable to locate a portrait of Sir Peter.
While driving to work last month, she heard a radio report about the Sir Peter Blake Trust, which increased her determination to see the yachtsman represented in the gallery.
On arriving at work minutes later, an "astonished" Ms McKinnon opened an email from Mr Paton with an attachment of his painting.
She immediately contacted him.
A friend of Sir Peter's, United States-based Saatchi and Saatchi chief executive Kevin Roberts, was approached about financing the $40,000 portrait and he quickly agreed.
"Peter was a heroic New Zealander who proved nothing is impossible, time and time again," Mr Roberts said from New York.
"This portrait captures a unique moment in New Zealand history and will help keep his spirit alive."
