About 2,000 veterans, their families and Defence Secretary Ben Wallace paid their respects to the 1,441 military personnel who died on active duty during the deployment, which lasted almost 38 years.
The service, organised by the Royal British Legion, took place amid tight security at a rain-swept National Memorial Arboretum.
It comes as a number of contentious cases make their way through the courts and amid continuing legacy investigations into British military personnel, with some veterans complaining of a witch hunt.
The operation to send troops to Northern Ireland, between August 14 1969 to July 31 2007, to tackle inter-community violence would become the longest continuous deployment in modern British military history.
All the names of those who died are inscribed on the while Portland stone of the commanding Armed Forces Memorial, which marks the centrepiece of the arboretum at Alrewas, Staffordshire.
In the course of the operation, 722 military personnel died in paramilitary attacks, and 719 from other causes.
Of those killed by terrorist attacks, more than a quarter served with the Ulster Defence Regiment, which recruited directly from Northern Ireland.
Over the years, more than 300,000 personnel were deployed in total over the course of the whole operation.
Mr Wallace, who served in Northern Ireland with the Scots Guards in the 1990s, said: “Northern Ireland, Operation Banner, 50 years ago, was a success.
“It was a military deployment in support of civilian powers and the police, to make sure we saw off the threat of terrorism and the attacks that were going on.
“In order to defend both communities, it wasn’t a one-sided affair, there were people being intimidated in the Nationalist community by terrorists and people in the loyalist community.
“And Op Banner, in the end, drove a terrorist organisation pretty much out of business – many of them in prison.
“It allowed space to be created for a political solution to The Troubles that had lasted for a very long time.
“I think that is something to be proud of and it is also time to remember many of the people today who lost their lives doing it.”
He added: “It’s a great success story.”
Later, the Defence Secretary, who lost two comrades killed during his first tour of Northern Ireland in 1992, responded to veterans’ concerns over prosecutions.
He referred to legal claims against British forces in Afghanistan and Iran “which in the end turned out to be almost nothing whatsoever”.
He said: “We’ve got to look at some of those lessons and see what else we can do in Northern Ireland to make sure we treat veterans with dignity and make sure the fishing trips we’ve seen in the past, where in the end no real evidence has been produced, is not being used to drive a constant re-writing of history that somehow actually the British Army was the bad guys.
“When in fact the reality was the terrorists who intimidated and bombed and killed thousands of people in Northern Ireland in that time, they’re the ones who should really be held to account and we should do more to find them.”
He also said he did not support an amnesty for those who had murdered British service personnel, but said there was “space for reconciliation”.
Asked what the long-term solution to the legacy of such investigations was, he said: “I’d like a legal solution.
“I’d like to see a solution that doesn’t just let off the hook a whole load of terrorists because, in the end, an amnesty would be saying that.”
He added: “It’s not straightforward; whether it’s an amnesty, and the statute of limitations can be legally challenged at some levels.”
Mr Wallace was speaking after a service remembering those who made the ultimate sacrifice, and included accounts from former Royal Ulster Constabulary, Army and firefighting personnel, often first at the scene to rescue people trapped in bomb-blasted buildings.