A memorial service has taken place in the town in southern Scotland, attended by politicians, officials, families and members of the community.
Services will also take place in London and in the United States, where most of the 270 victims were from.
Scotland's First Minister Alex Salmond and Lord Wallace, Advocate General for Scotland, were among those who took part in the memorial service and wreath-laying ceremony at Dryfesdale Cemetery.
The service was led by the Rev John MacLeod, while readings and prayers were given by Major Kingsley Layton, commanding officer at Lockerbie Corps, the Salvation Army, and Lord Lieutenant Jean Tulloch, representing the Queen.
US government representative Craig Lynes said: "We gather today to remember each of the lives that were lost in this tragic event of December 21, 1988.
"Families, friends, it is you who bear the heaviest of hearts. While our words can do little to repair the damage caused by this act of terrorism, we offer them with hope.
"We offer these words as a tribute to the 270 lives that were cut short that evening, we offer them as a way to help carry their lives forward as we continue ours.
"Your ability to move on from this incident to create your own families, yet remember the loved ones lost, is an encouragement to those who witness your tenacity.
"The comfort and reassurance you have given each other over the years is an inspiration to anyone who has known such loss.
"From the callous and the cowardly acts committed throughout history by those who attempt to strike terror in our hearts and minds, comes the resolve and strength to continue to fight and prevent organisations and individuals from committing such atrocities.
"We stand together united in our search for justice."
Speaking just before the service, Lord Wallace told BBC news: "There are families who suffered a huge loss at the time, and it changed their lives forever. I don't think we should ever forget what man's inhumanity to man does.
"I saw the signs of a community that was trying to build on the bonds of community. I think they have taken tremendous strides to ensure that real sense of community is here."
Pan Am flight 103 was on its way from London to New York when it exploded above Lockerbie, in southern Scotland, on the evening of December 21 1988, killing everyone on board and 11 people on the ground.
Scotland Office minister David Mundell and Scotland's Lord Advocate, Frank Mulholland, will attend a memorial event at Arlington National Cemetery, Washington DC.
Scotland's Deputy First Minister Nicola Sturgeon will join Scottish Secretary Alistair Carmichael and Moderator of the General Assembly of the Church of Scotland the Right Reverend Lorna Hood at a service in Westminster Abbey.
Scotland's Justice Secretary Kenny MacAskill will attend an evening service at Dryfesdale Church in Lockerbie.
Mr Salmond said: "On this 25-year anniversary, and as the country prepares once more to relive the harrowing events of that terrible night, it is important that we remember that the pain and suffering of the families and friends of those who died has endured since that winter night in 1988."
Prime Minister David Cameron said: "To families, friends, neighbours, loved ones and all those caught up in the painful process of recovery, let us say to them: our admiration for you is unconditional; for the fortitude and resilience you have shown; for your determination never to give up. You have shown that terrorist acts cannot crush the human spirit. That is why terrorism will never prevail.
"And even in the darkest moments of grief, it is possible to glimpse the flickering flame of hope."
Speaking on behalf of the Scottish prosecution service, Lord Advocate Frank Mulholland and solicitor general Lesley Thomson said: "Saturday is a time to remember those who lost their lives on December 21 1988 and the impact it had on so many lives then and since that tragic night.
"On behalf of the Crown Office and Procurator Fiscal Service, our message is simple: Always remembered, never forgotten; forever in our hearts."
Only one man, Abdelbaset al-Megrahi, was convicted of the bombing. He was found guilty in January 2001 and given a life sentence. He was diagnosed with prostate cancer in 2008, leading to a decision to free him under compassionate release rules.
Mr MacAskill took that decision on August 20 the following year, sparking a row among politicians on both sides of the Atlantic.
Megrahi died in Tripoli, Libya in May last year.
Despite the guilty verdict and Megrahi's decision to drop a subsequent appeal against conviction, politicians, campaigners and families of victims are still dealing with the impact, with some of the British relatives considering another appeal against his conviction when they meet with lawyers in the new year.
Speaking after the wreath-laying, Mr Salmond said: "Out of disaster, there are the bonds of friendship.
"Lockerbie has been a welcoming place for the relatives of those who died, and over the last 25 years has taken as good care of people as it possibly could.
"I don't think you ever move on, you certainly never forget, but people do rebuild their lives and many have."
During the service Reverend Macleod said: "It is 25 years after the day on which certain men chose to set aside their humanity and destroy the lives of 270 people in the air over this area of Scotland and here in the little town of Lockerbie; not only their lives but also those who survived, families and friends.
"What we the people of Lockerbie in this area will never tire of saying is we welcome you once again to this place where you know you are always welcome. In doing so we seek to comfort and console you."
Jane Schultz lost her 20-year-old son Thomas who was part of the Syracuse University group on board the flight.
"In my heart, to me this is home and there was no other place I felt I should be on this very sad and special occasion. I wanted to be here to honour my son as well as the 269 other victims and to be in the place where he took his last breath," she said.
"I thought the service was very meaningful and the weather co-operated with us. The service was just really spot on.
"I try to get back to Lockerbie at least every two years because to me it's home. It's nice and peaceful and it's where Thomas was, so it's like coming home."
US Consulate General in Edinburgh Zoja Bazarnic, who also attended the ceremony, said it is important to mark the tragedy.
"I think, 25 years on, there were so many lives that were affected by that and it was very important and meaningful for my colleagues and I to be here today to pay our respects to the victims but also to share our thoughts and prayers with the families and the people of Lockerbie," he said.