Some 1,000 people joined the service alongside the bay where for years chemical company Chisso Corp dumped tonnes of toxic mercury, contaminating local fish and, in turn, poisoning local residents.
Half a century later and hundreds of victims and campaigners are continuing to battle the government for compensation.
"We know the problem once caused by the pollution has not been solved even after 50 years," Minamata Mayor Katsuaki Miyamoto told Monday's memorial gathering.
"We need to lead the way for the human race and to continue to sound the alarm to prevent such a tragic event happening again.
The service came exactly 50 years since the first case of what became known as Minamata disease was diagnosed.
Some 2,265 people - including 1,573 who have already died - have been officially recognised by the government as suffering from the mercury poisoning.
However, campaigners say the criteria for recognition are too rigid, leaving thousands more victims unrecognised and needing government support.
At the weekend about 2,000 victims and campaigners marched through Tokyo urging the government to extend help to thousands more victims of the pollution-caused neurological disorder.
The disease was first diagnosed on May 1, 1956, on Japan's southern main island of Kyushu, and was later linked to the consumption of fish from Minamata Bay, where Japanese Chisso had been dumping mercury since 1932.
Despite the discovery, Chisso was allowed to keep dumping mercury into the bay until 1968. According to local oficials a total of some 150 tonnes or more of the toxic metal were pumped into the into the sea.
The company was not ruled responsible for the health problems until 1973.
Fifty years since that first diagnosis victims' advocates say the poisoning was much more widespread than the government is willing to recognise.
"I'm keenly aware of the government's responsibility for not being able to take appropriate measures for a long time and failing to prevent the damages from spreading"
Japanese prime minister
Last week members of Japan's parliament voted for a resolution urging the government to provide healthcare and compensation to thousands of people who are not among those officially recognised as victims.
Activists say as many as 30,000 people could have been affected.
The government announced plans last year to expand its support programme, but on Friday Shinzo Abe, the chief cabinet secretary, said it had no plans to widen the definition of the disease.
In October 2004 Japan's Supreme Court ruled that the government was responsible for allowing the pollution to continue for years after its discovery.
But the ruling meant that compensation was only paid to 37 of what campaigners say are thousands of unrecognised victims
On Friday the prime minister, expressed regret over the government's failure to stop the disaster and pledged to protect the environment.
"I'm keenly aware of the government's responsibility for not being able to take appropriate measures for a long time and failing to prevent the damages from spreading," Junichiro Koizumi said.
"I apologise with no reservations," he added.
It was not until 1968 that Tokyo finally declared that Minamata disease was a form of mercury poisoning caused by polluted water.
At the time, victims who spoke out risked being stigmatised, harassed by company thugs and endured lengthy and costly legal battles.
The disease, which became an international symbol of the environmental damage and corruption behind Japan's rise to economic prominence, causes blurred vision, shivering arms and legs, seizures, as well as difficulty in walking and talking.
The babies of poisoned mothers are sometimes born with serious damage to their nervous systems, suffering mental and physical deformities.
The worst affected died painful deaths as the mercury destroyed their central nervous system.
Lesson not learned
Meanwhile the many residents of Minamata are angry that the lessons of history have not been learned.
They are enraged by a plan to create an industrial waste dump on top of a nearby mountain, which they say will contaminate the town's water supply.
Koji Nakamura, Minamata city assembly member, asked: "Methyl mercury that contaminated the fish and sea was industrial waste. Why do we have to suffer from industrial waste again?"