Prime Minister Gordon Brown, London Mayor Boris Johnson and the Prince of Wales and his wife the Duchess of Cornwall attended the memorial service along with families of the victims. The stainless steel columns stand 11.5 feet tall in central London's Hyde Park.
Former Mayor Ken Livingstone, who was in office at the time of the attacks by four suicide bombers on three subway trains and a bus, praised the design of the memorial.
"I think it's just exactly right. Often, it's very difficult to do something like this and get it right," he said.
The daughter of a woman who died in the bomb attacks on London's transit system says a memorial to the victims is "truly incredible."
Saba Mozakka lost her 48-year-old mother, Behnaz, when a suicide bomber set off an explosion on her Piccadilly Line Tube train near King's Cross station.
She said Monday that the memorial "reflects the importance of the people commemorated."
Britain's main opposition Conservative Party leader David Cameron, who attended the memorial, said some of the hundreds of wounded and the families of those killed had helped plan the statues.
As Londoners gathered for the ceremony, British lawmakers warned that the city's subway and bus network remain extremely vulnerable to attack by terrorists.
The Home Affairs Select Committee said in a report published Tuesday that the city's famous Tube and bus network remain an iconic target.
Transport for London, which operates public transport in Britain's capital, said it has carried out major improvements to security and upgraded communications systems for emergency staff.
"We must never underestimate the continued grave threat the U.K. faces from terrorist attack," committee chairman Keith Vaz said in a statement. "There is no doubt that there are sophisticated groups out there focused on doing us harm."