Singer Rihanna, who is from Barbados attended the event alongside the Prince of Wales, Charles, who represented the Queen.
In a speech, Prince Charles acknowledged the "appalling atrocity of slavery" the Caribbean island suffered while stating it was time for the Island to move ahead as a republic.
Speaking as the guest of honour at the event, Prince Charles reiterated the continuing ties between the two nations despite the constitutional status change.
He described the moment as a new beginning before being awarded the prestigious Order of Freedom of Barbados by the new president.
The Queen sent the country her "warmest good wishes" for "happiness, peace and prosperity in the future" and said the nation holds a "special place" in her heart.
To signify the official change of power, a final salute was made to the British monarchy and the British Royal Standard flag was lowered and replaced.
Dame Sandra Mason, 72, the island's governor-general since 2018, was named as president-elect of the nation following a vote in parliament last month.
She now replaces the Queen as the head of state.
"Vessel Republic Barbados has set sail on her maiden voyage. May she weather all storms and land our country and citizens safely on the horizons and shores which are ahead of us," she said after being sworn in.
She later announced that pop star Rihanna would be named a national hero by President Mason.
The artist and businesswoman, whose full name is Robyn Rihanna Fenty, was previously named an ambassador by her home country in 2018.
"May you continue to shine like a diamond and bring honour to your nation," Ms Mottley said, in reference to one of Rihanna's songs.
Barbados announced its plan to become a republic last year, but it says it will still remain within the Commonwealth.
Barbados was one of England's first slave colonies.
English settlers first occupied the island in 1627 and, under British control, it became a sugar plantation economy using enslaved people brought in from Africa.
Slavery was abolished in Barbados in 1834 and the country became fully independent in 1966.
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