The Pike River Mine disaster - a series of three explosions between November 19 and 26, 2010 - was New Zealand's worst mining disaster since 43 men died at Ralph's Mine in Huntly in 1914.
Prime Minister John Key, who is overseas, said in a statement that his thoughts were with the people of the West Coast.
"There is no comfort in my words for the families of those who died, as they are still living this tragedy day after day,'' he said.
"However it is fitting and right that we remember that it was this day two years ago that 29 men lost their lives.
"I am thinking of the families and the people of the West Coast today. New Zealand has immense sympathy for their continuing grief.''
Grey District Mayor Tony Kokshoorn said the tragedy was still "raw in everyone's minds''.
"The West Coast community is very tight-knit, with a lot of community spirit,'' he said.
"We're moving on but we're doing it in a sensitive way so we don't forget the 29 men still lying up in that mountain.
The families' private ceremony was followed by a public memorial at the Blackball Worker's Museum at 6pm, hosted by the Engineering, Printing and Manufacturing Union (EPMU), which represents miners.
"We will stand with the families and with the local community and we will mourn this loss together,'' said EPMU assistant national secretary Ged O'Connell.
"But while we mourn for the dead, we must also fight for the living. The Royal Commission's report shows this tragedy was avoidable, and our union will continue to campaign for the report's recommendations to be implemented in full.
"If we are to truly honour the memory of the Pike River 29 then we must ensure this is never allowed to happen again.''
