The body of the slain Coast Guard veteran, whose death was filmed by a bystander, was carried in a flag-draped casket past a crowd assembled outside the W.O.R.D. Ministries Christian Center in Summerville, north of North Charleston, where the shooting took place on April 4.
Scott's death reignited a public outcry over police treatment of African Americans that flared last year after the killings of unarmed black men in Ferguson, Missouri, New York City and elsewhere.
"This is a sad day," said Rev. James Johnson, who is president of the local chapter of civil rights leader Rev. Al Sharpton's National Action Network.
"God has got a reason for what has happened," he told Reuters before the service. "Hopefully this will heal the world."
Michael Slager, the North Charleston officer who fired eight times at Scott's back as he fled from a traffic stop, has been charged with murder and dismissed from the police force.
Scott's family, who were escorted to the funeral by law enforcement officers, had changed their mind on allowing media to attend after a newspaper reported that the family wanted Sharpton to stay away, Johnson said.
Sharpton was always welcome, though the family had not scheduled him as a speaker, he said.
Sharpton said he had a scheduling conflict on Saturday, the last day of his organization's convention in New York, but would attend a vigil in North Charleston on Sunday and meet with Scott's family.
"People are close to the point of saying 'what is it going to take to see real change?'," Sharpton said. "This validates the need for a federal oversight of policing."
Scott, 50, was driving a black Mercedes-Benz when he was pulled over by Slager, 33, for a broken tail light. Video from the dashboard camera in Slager's police cruiser recorded a respectful exchange between the two men before the officer returned to his patrol car.
A few minutes later, after being told by Slager to stay in the Mercedes, Scott emerged from his car and ran off. He was apparently unarmed.
A cell phone video taken by a bystander showed the men in a brief tussle before Scott ran off again, Slager fired his gun and Scott slumped into the grass. There was a gap between the two videos, however, as the officer was not wearing a body camera.
Rep. James Clyburn, a U.S. congressman who among the 500 people at the funeral, said he wanted national strategies and standards for law enforcement to be considered.
"Body cameras are a good start. They're certainly not a panacea," said Clyburn, who was joined at the funeral by U.S. Senator Tim Scott and Rep. Mark Sanford.
Scott had a history of arrests for failing to pay child support and was forced out of the U.S. Coast Guard in 1986 after more than two years of service because of a drug offense.
He was nonetheless discharged under honorable conditions because he had a good record of service, the Coast Guard said.