German, Israeli and Bavarian flags were lowered to half-staff at the beginning of the ceremony at the Fuerstenfeldbruck air base, outside Munich, where the victims' relatives — joined by Israeli Deputy Prime Minister Silvan Shalom — lit candles in their memory.
"Today 40 years ago, our lives changed forever," said Ankie Spitzer, the widow of fencing coach Andre Spitzer.
"For us, the families of the victims and for those of the 1972 Israeli Olympic delegation who were fortunate enough to escape the massacre, Munich and Germany will be forever connected to that darkest day in our lives," she said.
Before dawn on Sept. 5, 1972, eight members of a Palestinian terrorist group called Black September clambered over the unguarded fence of the Olympic village. They burst into the building where the Israeli team was staying, shooting dead wrestling coach Moshe Weinberg and weightlifter Yossi Romano.
Some Israeli athletes escaped through a back door but nine were seized. The captors demanded the release of more than 200 Palestinians held by Israel and two German left-wing extremists in German jails.
After a day of tense negotiations, the guerrillas and their hostages were allowed to leave aboard two helicopters for Fuerstenfeldbruck. The terrorists were promised a plane and safe passage to an Arab country.
Sharpshooters at the airfield opened fire as the captors and hostages prepared to board a Lufthansa jet. The guerrillas tossed grenades at the hostages, and blew up one of the helicopters. When the fighting died down, the captives were dead along with five of their captors. A German police officer also was killed.
Germany's top security official, Interior Minister Hans-Peter Friedrich, said the images of the drama "have burned themselves into the memory" of those who saw them.
"We — the ones who had and have a special obligation to protect Israel — we were not able to protect the Israeli athletes," Friedrich said. "Were we too naive? Did we underestimate the dangers? These are questions that remain. We were not able to protect those who had come to Germany, unsuspectingly and peacefully, three decades after the Holocaust."
Spitzer criticized "the incompetence, the stupidity and the arrogance" of those who were supposed to protect the athletes and urged today's German officials to "reopen an investigation into the failures of the authorities of 1972."
Several speakers at Wednesday's event criticized the International Olympic Committee's refusal to offer a moment of silence for the Munich victims during the opening ceremony for this year's games in London.