Among those honoring Nicola Calipari in the Santa Maria degli Angeli Church were Premier Silvio Berlusconi, President Carlo Azeglio Ciampi and other top officials, including U.S. Ambassador Mel Sembler and Rome Mayor Walter Veltroni.
An honor guard slowly carried the casket, draped with an Italian flag, into the church, where the crowd stood to applaud. In the front row, Calipari's widow, Rosa Maria, and relatives gripped each other's hands and dabbed away tears. Several mourners buried their faces in their hands.
Aside from the moment when the crowd broke into applause when Calipari's body was taken away, there was a solemn silence throughout the ceremony itself, reports CBS News Correspondent Charlie D'Agata.
The military chaplain who presided over the funeral remarked on Calipari's "grandeur of soul," sacrificing his own life so that journalist Giuliana Sgrena might live.
"He died as a hero, and I cannot forget he had also helped to free us," said Maurizio Agliana, one of four Italian security guards kidnapped in Iraq in April.
The 90-minute funeral was carried live on several TV stations, including Vatican television.
Calipari's body had lain in state at Rome's Vittoriano monument after it was returned from Iraq on Saturday night, with tens of thousands of people streaming past the coffin.
"I think it's absurd that things are going this way in Iraq, when people die because of someone else's decision," said 30-year-old architect Giorgia Semprini, who was among thousands of people gathered quietly in the piazza outside the church.
Giuliana Sgrena, the hostage whose life Calipari saved, said it was possible the car she and Calipari were riding in was targeted deliberately because the United States opposes Italy's policy of negotiating with kidnappers.
The White House Monday said it is "absurd" to suggest that American troops deliberately targeted the car carrying a freed Italian hostage in Iraq, reports CBS News Correspondent Peter Maer.
Calipari was killed Friday when U.S. troops at a checkpoint fired at the car as it headed to the airport shortly after Sgrena's release. Sgrena, a journalist who was abducted Feb. 4 in Baghdad, was recovering in a Rome hospital from a shrapnel wound to the shoulder.
White House spokesman Scott McClellan said the road where the incident occurred is "one of the most dangerous" places in Iraq, "a combat zone" where troops "have to make split-second decisions to protect their own security." He repeated U.S. regrets over the incident and promised a full investigation.
Sgrena has rejected the U.S. military's account of the shooting, claiming that American soldiers gave no warning before they opened fire.
Calipari has become a national hero in Italy, CBS News Reporter Sabina Castelfranco said. Calipari, a highly experienced hostage negotiator, is being described as "a generous hero," a savior who must not be forgotten.
An autopsy was performed Sunday, and the Italian news agency ANSA quoted doctors as saying he was struck in the temple by a single round and died instantly.
Sgrena said Calipari died shielding her. She offered no evidence to support her claim that the attack was deliberate, and in an interview published in Monday's edition of the daily Corriere della Sera, she said she does not know what led to the attack.
"I believe, but it's only a hypothesis, that the happy ending to the negotiations must have been irksome," she said. "The Americans are against this type of operation. For them, war is war, human life doesn't count for much."
In separate remarks Sunday, she said: "The fact that the Americans don't want negotiations to free the hostages is known."
"The fact that they do everything to prevent the adoption of this practice to save the lives of people held hostage, everybody knows that," she added, speaking to Sky TG24 television by telephone. "So I don't see why I should rule out that I could have been the target."
Neither Italian nor U.S. officials gave details about how authorities won Sgrena's release after a month in captivity. But Agriculture Minister Giovanni Alemanno was quoted as saying it was "very probable" a ransom was paid. U.S. officials have cautioned against ransoms, saying they encourage further kidnappings.
Sgrena said she had spoken with Calipari's widow and promised to get to the bottom of the affair, "because such exceptional people cannot die for no reason."
The shooting has fueled anti-American sentiment in Italy, where a majority of people opposed the war in Iraq and Berlusconi's decision to send 3,000 troops after Saddam Hussein's ouster.
"Italy is a great country, and this is why we must ask for precise and detailed explanations of what happened from the American government and get them quickly," Sandro Bondi, national coordinator of Berlusconi's Forza Italia party, was quoted as saying by ANSA.
Sgrena, who works for the communist newspaper Il Manifesto, a fierce opponent of the war and a frequent critic of U.S. policy, said she knew nothing about a ransom.
In an article Sunday, Sgrena said her captors warned her shortly before her release to beware of the Americans. She later told Italian state TV RAI that "when they let me go, it was a difficult moment for me because they told me, `The Americans don't want you to return alive to Italy."'
White House counselor Dan Bartlett said Sunday that it was crucial the facts be determined before judgments were made about the shooting.