Religious leaders opened the ceremony at the Church of the Holy Sepulchre, built at the site where Christians believe Jesus was crucified and buried.
They stood in front of the 19th-century edicule surrounding the tomb as hymns were sung.
Dignitaries including Greek Prime Minister Alexis Tsipras were in attendance.
Greek Orthodox Patriarch Theophilos III of Jerusalem, in his address to the ceremony, called the restoration "not only a gift to our Holy Land but to the whole world."
The shrine is a key part of the Church of the Holy Sepulchre in Jerusalem's Old City.
The church is located in Israeli-occupied east Jerusalem, which the Palestinians see as the capital of their future state, and the shrine was briefly closed by Israeli authorities in 2015 over security fears.
Centuries of candle smoke and visiting pilgrims had left the shrine discoloured and almost black.
Parts of it were also coming loose, with warnings that it was structurally unsound and posed a risk to the millions of pilgrims who visit the site every year.
"Before this the monument was black," chief renovator Antonia Moropoulou told AFP.
"This is the actual colour of the monument, the colour of hope."
Unlike other parts of the church, which were renovated between the 1960s and 1990s, the edicule had been neglected.
Moropoulou said that restorers had systematically dismantled, cleaned and renovated almost all of the edicule, including the columns and upper and inner domes.
A window has been installed to allow pilgrims to see the bare stone of the ancient burial cave for the first time.
"The deformations of the holy edicule are addressed and the structural integrity is assured," Moropoulou said.
Samuel Aghoyan, the superior of the Armenian Church at the Sepulchre which co-financed the project, said that after the renovation the edicule looked "like a brand new building".
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