The service, organized by Mazsihisz, the country's largest Jewish organization, was the first in a series of events marking the Holocaust, which claimed the lives of some 600,000 Hungarian Jews, most deported to Nazi death camps.
The anniversary has been marred over Hungary's own role in the Holocaust including a row over a plan by Prime Minister Viktor Orban's government to build a monument in Budapest depicting Hungary under attack by Germany.
Local Jewish organizations and historians say the monument appears to whitewash the central role of Hungarians in organizing the 1944 deportations.
Last month, Mazsihisz said it would boycott Holocaust memorial events organized by the government unless the plan was scrapped, but authorities agreed only to postpone the project until May.
A commemorator on Wednesday held a sign that read - "1944: It was Hungary's sin too."
One 60-year-old in the crowd, a daughter of Holocaust survivors, told AFP that she would "jump off the top of the monument if it was erected."
Gusztav Zoltai, a Holocaust survivor and Maszihisz director, said the Nazis met little resistance when they invaded Hungary.
Anti-Semitic attitudes and incidents have increased in Hungary in recent years, leading some to accuse Orban's government of turning a blind eye to the problem.
Israeli ambassador to Hungary Ilan Mor told the crowd it was unacceptable that people should live in fear in any country just because they are Jewish.
Hungary's Deputy Prime Minister Zsolt Semjen also attended the event.