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The fire on December 8, 1942, claimed the lives of 37 women.
Through "the generosity of families, businesses and sponsors", a memorial plaque was unveiled at a special ceremony on Saturday where friends and descendants or relatives of the women who died in the fire paid their respects to those whose lives were lost.
The memorial service was officiated by the Rev Vivienne Galletly.
"Now is the time for us to gather and remember," she said.
Wendy Hellyer, whose great-aunt Alice Owens was one of the victims, said seeing all the people attend the service meant all of the effort by the organisers was worth it.
Jean Park, one of the co-ordinators for the plaque and service, said she was thrilled with the turnout.
It was important now to remember the women who died in the fire, she said.
At the time, very few people spoke of the incident or publicly remembered the names of the women who died because of the stigma surrounding mental health and the fact the women were committed to the asylum.
Money raised or left over from creating the memorial plaque will go to Otago Mental Health Support Trust.