Lady Gaga hailed gays as the "revolutionaries of love" and called for "full equality now" for same-sex couples around the world in a speech in front of hundreds of thousands in Rome.
The US pop diva criticised governments in Eastern Europe and the Middle East for condemning young people to a life of isolation and discrimination and told the EuroPride rally: "We're all from the same DNA. We were just born this way."
"I stand here as a woman of the world and I ask governments, with you, worldwide to facilitate our dream of equality," said the singer, who wore a Versace dress and a green wig and later performed two of her hit singles.
"We're all from the same DNA. We were just born this way," she said from a stage in the Circus Maximus - an ancient arena in the heart of Rome.
"Let us be revolutionaries of love and use our very strong human powers to save lives and encourage unity around the world," she said.
Organisers estimated the size of the crowd at around one million people.
There were other gay rights rallies around Europe on Saturday including one in Croatia in which several people were injured after opponents hurled stones and bottles at participants and several dozen people were arrested.
Lady Gaga's speech came after a parade through Rome where participants criticised the Vatican and Italy's government for their stance on gay rights.
"I want to tell the world, Europe and above all Italy, which is a bit closed, that we have the right to be treated like human beings," said 22-year-old Nikita, who wore a silver dress with platform shoes and feathers.
Placards read "Different People, Same Rights" and "Papa No, Gaga Si". One sign had a picture of Saint Peter's basilica with a cross through it.
There were also more provocative displays including a man dressed as a bishop who had the words "paedophilia" and "sex abuse" scrawled on his costume - in reference to a wave of child abuse scandals involving Catholic priests.
"Italy is the only country that does not recognise LGBT (Lesbian, Gay, Bisexual and Transsexual) rights," said Franco Grillini, a member of the opposition Italy of Values party and a historic gay rights activist.
"Italy should adapt to the rest of the Western world," he said.
Italy is one of the few European states that lacks specific legislation against homophobic violence and has no provision for gay civil unions.
The Vatican condemns homosexuality as a "disordered" behaviour and lobbies against laws allowing more rights for gays including for marriage and adoption.
Prime Minister Silvio Berlusconi last year incurred the anger of gay rights activists when he dismissed a sex scandal with a homophobic comment saying: "It's better to be passionate about beautiful women than to be gay."
Activists quickly came up with a slogan printed on placards and T-shirts reading: "It's better to be gay than to be Berlusconi."
Paolo Patane, director of the Italian activist group Arcigay, said he hoped the parade would help "push out" what he claimed was Italy's "most backward government" since World War II.
The leaders of two opposition parties - Italy of Values and Left, Ecology and Freedom - attended the parade, which also came on the eve of referendums that will again challenge the government.
Susanna Camusso, the leader of Italy's main CGIL trade union, also came.
A group calling itself the "Militia of Christ" meanwhile held a small protest with around 40 people in front of a basilica near the parade.
"We don't agree with gay pride... because it promotes a lifestyle that we believe is against human nature," said Fabrizio Lastei, a spokesman.
A large banner with a Celtic cross was also hung from the Colosseum by a far-right group read: "Rome - the capital of tradition."
Some politicians criticised Lady Gaga's decision to attend the rally.
"The gay world does not feel represented by someone who makes videos that offend Jesus," said Rocco Buttiglione, the deputy speaker of parliament.
"If Lady Gaga attacks the Holy Father or the Catholic Church, millions of gay moderates will not recognise themselves in those comments," he said.
Carlo Giovanardi, an outspoken junior minister in charge of family policy, dismissed the event as "a chance to mock the Holy Father, make fun of the clergy... and dress up in all sorts of costumes."
The 25-year-old singer, ranked this year's most powerful celebrity by Forbes magazine, spoke out last year against the now repealed US policy which forced gay servicemen and women to keep their sexuality secret or face dismissal.