
The street parade is the signature event of the four-day festival, now in its 39th year, which started on Thursday.
Festival co-ordinator Vanessa Williams said "magical" weather on all four days meant the schedule of over 40 events went without a hitch.
She estimated 15,000 people packed into the township for Saturday’s parade and other events, including the market day on Ramshaw Lane, providing a roaring trade for the arts, crafts and food stalls, and local cafes and restaurants.
"It was a great day for the stallholders, great for local businesses and community groups raising money," Ms Williams said.
Following a vintage car display on Buckingham St, free street performances kept crowds entertained for several hours, including Mullet Man and Mim and an aerial cabaret show on Library Green.
The crowd came to a standstill before 2pm to watch as the street parade made its way from Wilcox Green and along Centennial Ave, Buckingham St and Ramshaw Lane.
About 40 community organisations and businesses took part in the parade, including the Southern Lakes Highland Pipe Band, Lakes District Museum, Arrowtown junior rugby players riding in a Sunrise Balloons basket — which intermittently let off flames — and the cast of Showbiz Queenstown’s upcoming season of Into the Woods.
Adding to the cacophony of sound and colour were stilt walkers, fairies and Latin dancers, ice hockey players on rollerblades, a unicyclist, and a traction engine belching smoke and steam.
The Arrowtown kea, cub and scout group won the prize for best community float, with Bush Creek Ice getting second prize.
The day was capped off by a comedy show at the Athenaeum Hall.