Lucas Sircar, the archbishop of Kolkata, led a special mass where rich and poor sat together in prayer.
As people sang hymns, Sister Nirmala, the superior general of the Missionaries of Charity - the organisation Mother Teresa founded - held her palms together and occasionally waved at followers.
She succeeded Mother Teresa six months before she died.
Sister Nirmala said: "I am feeling deep joy and gratitude remembering Mother Teresa's presence today among us."
Mother Teresa, a winner of the Nobel Peace Prize, came to Kolkata, then called Calcutta, in 1929 as Sister Teresa after she said she heard a call from God to serve "the poorest of the poor".
She set up schools for street children and medical clinics for slum-dwellers in a predominantly Hindu country where Christians account for approximately 2.4 per cent of 1.1 billion people.
When she died in 1997, at the age of 87, her Missionaries of Charity, had nearly 4,000 nuns and ran about 600 orphanages, soup kitchens, homeless shelters and clinics around the world.
But Mother Teresa also had her share of critics.
Even on Wednesday, a few dozen people shouted slogans outside Mother House, saying she should not be portrayed as a saint due to her opposition to birth control and abortion.
Critics have also argued that Kolkata's long history of intellectual and artistic creativity has been ignored, and was painted as a pit of misery and suffering.
Sunil Ganguly, an Indian author, told Al Jazeera that because of Mother Teresa the world has only one view of Kolkata.
"She dedicated her whole life to the poor and downtrodden people of the city and I have a feeling that because of Mother Teresa, people thought that only very poor people and lepers and beggars live here," Ganguly said.
Questions over faith
Letters written by Mother Teresa to her colleagues and superiors over 66 years have revealed that she sometimes doubted God and was tormented about her faith.
Mother Teresa: Come Be My Light is a collection of letters published on Tuesday, compiled by an advocate for her sainthood.
There has been speculation that the publication of the letters would hurt the procedure to make her a saint, but Pope Benedict XVI had said in a speech that Mother Teresa's torment over God's "silence" was not unusual.