The day recalls the tale of Abraham’s willingness to sacrifice his son as an act of obedience to Allah, but before he did so Allah provided him with a lamb to slaughter in place of his son.
Imam Dr Ashraf Amer led the community in Eid prayer and in his sermon he explained the significance of the day.
Eid ul-Adha, or the festival of the sacrifice, falls on the 10th day of Dhul Hijjah, the month of the pilgrimage.
"The first 10 days of the Dhul Hijjah are the best days of the whole year, and the day of Adha, today, is the best day of these 10 days," he said.
On this day the blood of an animal was shed in the name of Allah and it was "mandatory to mention his name when we slaughter the animal".
If families were not able to slaughter an animal it would be considered the Prophet had slaughtered one on their behalf.
The slaughter was to be done with kindness, with a knife well sharpened and the animal put in a comfortable position, he said.
It was an act of charity as meat was shared with family, friends and those in need.
"We remember our brothers and sisters whose blood is shed in Syria, in Palestine, in Myanmar, in India, in Kashmir, in China and other places."
Otago Muslim Association chairman Dr Mohammed Rizwan said Muslims were encouraged to fast for the first nine days of Dhul Hijjah.
"Including the day of Eid, these are the best days of the entire year."
People were encouraged to fast and to ask for forgiveness.
"The ninth day of Dhul Hijjah is the day of Arafah.
"On this day, the Muslims are discouraged to do anything else apart from dedicating their day in the worship of Allah, and to fast.
"The Prophet, sallallahu alayhi wa sallam (peace be upon him), has said: Fasting on the day of Arafah expiates the sins of two years; the previous one and the coming one."
