Hundreds of thousands of people crowded into Whitehall as cheerleaders, musicians and acrobats sparked a frenzied atmosphere in the capital.
Streets were transformed into a gigantic film set as characters danced down roads with music from Moulin Rouge and Annie to accompany the procession, which was themed Lights, Camera, Action.
The 31st New Year’s Day Parade follows on from a dazzling fireworks display which lit up London’s skies on Saturday night.
The celebrations were watched over by 3,000 police officers as security was stepped up in the wake of terror attacks across Europe including truck attacks in Berlin and Nice.
Extra measures were brought in on Sunday to ensure the parade was not under threat.
Parade spokesman Dan Kirkby said: “We are in constant contact with all the authorities.
“Post-Berlin we were asked to make some additional changes to our security arrangements with the authorities and everything we’ve been asked to do we do.
“We are working hard to keep it a fun family event.
“I understand there are extra police on the route, and we have got extra security personnel and we have taken certain measures in terms of road closures to extend the sterile area.”
The event kicked off at Green Park Tube station and ends in Parliament Square, taking in Piccadilly Circus, Regent Street, Pall Mall, Trafalgar Square and Whitehall along the way.
Spectators cheered and waved Union flags as the first performers – cheerleaders accompanied by a marching band from Fort Myers High School in Florida – arrived at Whitehall.
Cruella de Vil, the evil dognapper from Disney’s 101 Dalmatians, waved as she passed families, followed closely by a pack of white and black spotted creatures.
Executive director Bob Bone, said: “The entire world has been beguiled by film and television down the decades and we wanted to pay homage to the men and women that produce such brilliant entertainment.”
Mr Kirkby said the “kaleidoscopic” celebration had grown and revolutionised London’s former “black hole of culture” on January 1 since its debut 31 years ago.
He said: “We reckon we have about 20 different nations represented, from Bolivia through to the US, and we’ve got Pakistan celebrating the 70th anniversary of the state of Pakistan, so all sorts.
“It’s a kaleidoscopic parade full of culture, music and colour. It’s quintessentially quirky, the very best of British meets people from all over the world.
“And it’s a testament to the fact that London is open for business.”