A large cemetery played host to around 5,000 survivors from the region as they visited the graves of loved ones at the end of a 12-month period of mourning.
Despite the global aid effort that followed the earthquake, survivors say they still lack many basic amenities.
Iranian officials say foreign donors have failed to fulfil aid pledges.
President Mohammed Khatami has said only $17m of assistance had been received from abroad, out of the $1bn initially promised.
Many who survived the earthquake still live in temporary camps and suffer from injuries and psychological problems, according to the BBC’s Jannat Jalil.
Housing delays
Almost every family in Bam lost someone to the tremors that rocked the southern city in the early hours of 26 December 2003.
More than 70,000 people were left homeless by the quake, which destroyed about 80% of the mud-built city, including its grand citadel, a UN world heritage site.
One year on, mourners in Bam’s cemetery sprinkled rose-water and laid photographs at the graves of loved ones before offering food to passers-by, in accordance with Iranian tradition.
A 45-year-old woman told French news agency AFP of how she remembers hearing survivors crying out from under the rubble.
“My son rushed to take his father, his brother and his sister out from beneath the ruins. After several hours of work, he succeeded, but they were already dead,” she said.
Some went to the cemetery hoping to be re-united with relatives who have been unaccounted for since the disaster.
Many survivors who are still waiting for new accommodation have accused Iran’s government of failing them.
Iranian authorities say they want to ensure new housing for Bam survivors can withstand future earthquakes.
