A specially invited audience of over 2,000, including his mother Violet, gave him a standing ovation as the Lord Mayor Mairtin O Muilleoir described the singer as the city's greatest son.
He declared: "He united us in the past, he's united us tonight and he will unite us in the future.
"This represents our love, respect and gratitude for Van Morrison from the 'dark side of the street to the bright side of the road'."
Morrison was presented with a special scroll and gold ceremonial key just before his opening set.
His daughter Shana was among his backing group on stage at the Waterfront Hall.
He opened with the instrumental Celtic Swing - Morrison played the saxophone - before playing two of his biggest hits, Moondance and Brown Eyed Girl.
The Lord Mayor said: "Instead of a long speech, Van is going to give us the concert of our lives."
Tickets for the concert were allocated to members of the public in Belfast through a lottery system free of charge. But there was some controversy after it emerged 500 had been reserved for VIPs and that the 51 councillors would receive four each.
There was also criticism from some councillors when it emerged that even though Morrison was performing for free the star's band was being paid £36,000 for the performance.
Belfast City Council unanimously agreed in September to grant its highest honour to the singer, who is only the second person in 10 years to receive the accolade.
In May, former Olympic champion Dame Mary Peters was awarded the Freedom of the City at a civic ceremony in Belfast City Hall.
Other previous recipients include the Merchant Navy, the poet John Hewitt and former prime minister Winston Churchill.
Throughout his 50-year music career, Morrison has risen from the Irish showband scene to global stardom, winning six Grammy Awards and a Brit as well as places in both the Rock and Roll and the Songwriters' Halls of Fame.
Known to fans across the world as "Van the Man" the shipyard worker's son from east Belfast has drawn inspiration from the area where he was born and raised for hits such as Cyprus Avenue and Hyndford Street.
COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? email@example.com