Stars including cyclist Sir Chris Hoy, swimmer Ellie Simmonds, heptathlete Jessica Ennis, and sprinter Jonnie Peacock proudly wore their medals as they waved to fans from open-top floats that wound their way through streets full of fans.
Simmonds, left, said the reception they received was "amazing".
About 800 athletes took part in The Greatest Team Parade, which passed crowds, dozens deep in places, who became a sea of red, white and blue as they waved Union flags.
A spokesman for the Mayor's Office said the near-million spectators made it one of the largest events London had seen.
Pavements were thronged with people, while others leaned out of windows and from balconies to cheer the sportsmen and women.
Athletes and spectators were also treated to a spectacular flypast that roared over their heads. RAF aircraft were led by the British Airways jet used to bring the Olympic Flame to the UK at the start of the Games.
The flame-coloured Firefly A319 displayed a "thank you" message on its underbelly before the Red Arrows followed, leaving a trail of red, white and blue smoke in their wake.
The athletes' procession, made up of 21 floats grouped in alphabetical order by their sport, had started from Mansion House in the City and made its way through central London, ending up at the Queen Victoria Memorial on The Mall.
The Princess Royal, the Earl Of Wessex, Prime Minister David Cameron and London Mayor Boris Johnson could be seen clapping in the stands along The Mall as the floats approached.
The stars of the Olympics' Super Saturday, Mo Farah who won gold in both the 5000m and 10,000m, heptathlon gold medallist Ennis and long jump champion Greg Rutherford, were in the first three floats with Team GB's cycling stars including Hoy, Jason Kenny, Laura Trott and Victoria Pendleton on another.
The parade also involved many of the volunteers and Games Makers who walked in between the floats.
The athletes insisted the procession was also there to recognise spectators for their support during the Games.
After the Games stars disembarked from the floats, Sir Chris Hoy – who won two golds in the London Games to add to his previous four – took to the stage in the shadow of Buckingham Palace to speak to the crowds.
He said: "After Beijing we had an unbelievable reception and this is on a different scale. I just didn't think it was possible to see so many people turn out on the streets supporting us, a sea of red, white and blue. I'm so proud to be a part of this."
Britain's most successful Olympic sailor, four-times gold medallist Ben Ainslie said: "It's nuts, I've never seen anything like it. I'm proud to be a part of it.
"The whole nation has done a fantastic job with the Olympic Games and we should be very proud.
Triathlon gold medallist Alistair Brownlee said: "It's amazing that so many people were interested."