people at the ceremony held Saturday.
Harper said the bombing reminded Canadians "our country is not immune to terrorism".
"On that dark day, we got a shocking glimpse of (what) lurks at the core of some of our fellow human beings," the prime minister said.
Air India Flight 182 exploded while at an altitude of 31,000 feet above the Atlantic Ocean, south of Ireland. All on board were killed, of whom 82 were children.
Until September 11, 2001, the Kanishka bombing was the single deadliest terrorist attack involving aircraft. It is also the largest mass murder in Canadian history.
Jayashree Thampi, who represents the Air India Victims' Families Association, said the memorial had been built on a beautiful location.
"It's very serene, very beautiful - they couldn't have chosen a better place," she said, adding that it was the first site the association looked at," said Jayashree, who lost her daughter and husband on the flight.
The memorial is shaped to evoke the trajectory of the ill-fated flight to the point where it crashed into the sea off the coast of Ireland June 22, 1985. The names of the 329 passengers and crew are inscribed on the stonewall, The Star newspaper reported.
Sundra Aurora, whose 26-year-old daughter Shyla was working as a flight attendant on the Air India flight, flew from New Delhi for the commemoration. She called the memorial "very, very touching".
Lata Pada, who lost her husband and two daughters on the flight, called the structure "a beautiful sanctuary" and "a place of pilgrimage" for the families and friends who lost their loved ones.
Last year, Canadian Prime Minister Stephen Harper announced an inquiry, tasked with investigating if authorities underestimated the threat posed by Sikh extremists in Canada and if security agencies in Canada impeded the prosecution and appointed former Supreme Court justice John Major to head the inquiry.