Under a white marquee tent on his wide back lawn, he was given a "dubbing of the sword" by Governor General Jerry Mateparae.
The dignitaries, including Prime Minister John Key and Leader of the Opposition David Shearer stood up to applaud the honour bestowed to the veteran broadcaster, journalist and author.
Though visibly frail, Sir Paul shook the hands of guests as he walked down the aisle, and even gave a wink to Mr Shearer upon returning to his seat.
In his speech, Sir Jerry said the journalist had celebrated "the colourful, the passionate and the expressive side of our national psyche" throughout a long and varied career spanning print, radio and television.
"You have asked hard questions of politicians, bureaucrats and celebrities. And you have told the stories of everyday New Zealanders as they celebrated the good times, and grieved in the sad times.
"As you said at the close of your nightly programme for 15 years: 'Those were our people today, that's Holmes tonight.'
"Sir Paul, your achievements and commitment to your work as a broadcaster and supporter of community initiatives have brought us together here today.
"Your legacy to New Zealand broadcasting, as a pioneer - in talkback radio, and in news and current affairs on television - is considerable. You are man of many talents, skills and endeavours whom we acknowledge and celebrate today."
Sir Paul said his health was "an imbalance".
"It's not good, generally. I don't think Houdini will do it this time."
He said the honour meant a lot personally, for his family, for the Paralympics cause, for all of broadcasting, and for the Erebus plane crash case, which he had written a book on.
"The honour today means an incredible amount on so many levels."
- Michael Dickison of the NZ Herald and APNZ
