The pipeline, which cost $4 billion, runs 1,700km through Azerbaijan and Georgia before ending in Ceyhan on Turkey's eastern Mediterranean coast.
While the pipeline has a daily capacity of about 1 million barrels, experts say it is unlikely that full capacity will be reached within the first year.
Speaking at the opening ceremony on Thursday, Recep Tayyip Erdogan, the Turkish prime minister, called the pipeline "the Silk Road of the 21st century", saying it would boost economic development, co-operation and stability in a region that was once the Cold War frontier between Nato and the Soviet Union.
The pipeline will carry oil from the Caspian Sea fields, which is the world's third largest reserve, to Western markets.
The project which was conceived 12 years ago, was strongly backed by Washington in a bid to lessen Russia's long-standing grip over oil exports from former Soviet republics, while also bypassing Iran and easing Western reliance on supplies from the Middle East.
The inauguration ceremony comes only days before Vladimir Putin, the Russian president, is due to host the G8 summit, which will focus on energy security.
Praising US support for the project, Ilham Aliyev, the Azeri president, said: "We always felt the support of the United States and we are very grateful for their efforts."
Last month, Kazakhstan signed an agreement to join the project, committing an initial 7.5 million tonnes annually, with a pledge to raise it to 20 million tonnes in the long run.
Ceyhan is already the end-point of another pipeline from the oilfields of neighbouring northern Iraq.
Turkey aims to make the southeastern port a regional energy hub by connecting yet another oil conduit from its Black Sea port of Samsun.
Work is also under way on several other pipeline projects to carry Caspian and Iranian natural gas to Europe via Turkey.
It is hoped that the BTC pipeline will reduce traffic on the already congested Bosphorus Straits and help protect the local marine environment.
Erdogan said: "The project will also help us in our efforts to ease tanker traffic at the Turkish Straits, which has been posing a serious threat against environment and daily life."
The channel, which runs through the centre of Istanbul, is Russia's only shipping route connecting its southern coast to the Mediterranean and Western markets.
Extra shipping routes via the Bosphorus have been a source of debate between the two countries in recent times with Russia wanting more access and Ankara rebuffing its requests.
Turkey is forecast to earn $300 million annually from the pipeline.