The Himalayan pass of Nathu La, 4,000m (14,000 feet) above sea level, was once part of the ancient Silk Road.
The opening ceremony took place at the windswept border between India's Sikkim state and the Chinese region of Tibet.
Nathu La has opened just a few days after the first train service was launched from eastern China to Tibet.
The pass was given a festive look with Chinese and Indian flags fluttering and military bands playing.
China's ambassador to India and local officials from Sikkim and Tibet attended the opening ceremony at the border post in driving rain and bitter cold.
But the BBC's Subir Bhaumik, who was at the opening, says despite the poor weather conditions there was no shortage of enthusiasm among the hundreds of Indian and Chinese traders who had gathered there.
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