Flag-bearer Sir Chris Hoy has led out Team GB, who are dressed in white and gold tracksuits, to loud applause.
Games chief Seb Coe welcomed the world to London, saying the event celebrates "what is best about mankind".
The three-hour spectacle, a quirky take on UK life, is set to be viewed by a TV audience of one billion people.
At the beginning of the show iconic images of London and Britain were beamed to the world, and all four countries of the UK were represented in song.
The field at the stadium in Stratford in east London was turned into a green meadow, with a cast of 10,000 volunteers taking roles from British history.
The show took the watching world through "great revolutions in British society", from an agricultural setting through to the Industrial Revolution itself.
Steelworkers began forging material that transformed into golden Olympic rings, which lifted into the air to be suspended above the performers.
There were cheers too as the crowd saw a film featuring an unlikely meeting between the Queen and the 007 James Bond.
"Good evening Mr Bond," the Queen said in the clip, before they left together, apparently heading towards the Olympic Stadium in a helicopter.
A helicopter then flew over the stadium to the sound of the Bond theme tune, as two figures parachuted down, one dressed as the monarch.
As if by magic, the Queen appeared in the stands - part of a crowd of about 80,000 - amid cheers.
The BBC's Claire Heald, at the stadium, says: "It was quite quiet among the crowd, after the excitement of a sky-diving Queen. But Bowie, Queen (as in the band!) and New Order fit the sparkle of the stadium and lift the mood."
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