Home Secretary Priti Patel was among those to light a candle at the moving vigil to remember the three men who lost their lives during the incident.
David Wails, 49, Joseph Ritchie-Bennett, 39, and James Furlong, 36, were fatally stabbed during the attack at Forbury Gardens on June 20.
Speaking at the private memorial event on Saturday evening, Mayor of Reading Cllr David Stevens said the town would always be “inclusive and diverse” and would not be divided by the atrocities that took place.
Following short speeches by local officials, family members of the three men were the first to lit candles in their memory.
Afterwards, the small group of relatives embraced in a huddle for a few moments, before speaking and laughing together.
Cllr Stevens told the vigil that the attack had left Reading “feeling a mix of horror, disbelief and immense sadness.”
He added: “Just one week ago, friends and families were sat in Forbury Gardens, just a few yards from here, making the most of the warm weather on a summer’s evening and enjoying one another’s company.
“It was around now, the happiness and tranquillity of the evening was shattered in the cruellest and most horrific way.
“Three men lost their lives and several people sustained injuries. Others were forced to witness the most horrendous scenes.
“Last Saturday, Reading lost James Furlong, Joe Ritchie-Bennett and David Wails. To their families and close friends, we can only imagine your grief.”
In the distance, behind a small podium set up for speakers, police tape from the large cordon still shutting off the roads connecting to Forbury Gardens could be seen.
Due to the coronavirus pandemic, Reading Borough Council was due to stream the event on its Facebook page to avoid a crowd gathering in Market Place.
But a large screen was also erected on nearby Broad Street for residents to watch proceedings.
The Lord Lieutenant of Berkshire, James Puxley, paid tribute to Mr Wails, Mr Ritchie-Bennett and Mr Furlong at the vigil.
He said: “From what I hear they were honest lovely outstanding people and good law abiding citizens. “They did not deserve what happened to them. They had so many years ahead of them.
“Who knows what they would have achieved in life had they lived to an old age. Doubtless they would have achieved many good things that the community is now deprived of benefiting from.”
He also praised the emergency services and members of the public who helped the victims of the attack, some of whom “tore off their shirts to make bandages”.
Thames Valley Police chief constable John Campbell added his force’s condolences to the family of the victims.
He told them that Mr Wails, Mr Ritchie-Bennett and Mr Furlong had been “cared for and comforted by my officers and others who came to help them in in their final moments”.
Mr Campbell said Reading should take “pride” in how it has responded, which highlighted a “coming together of a diverse community, joined by the bond of humanity and a shared sense of injustice”.
Hailing the work of his officers, he also vowed to “seek justice for those who lost their lives and those that were harmed” in the incident.
Before the lighting of candles, the Bishop of Reading, The Right Reverend Olivia Graham, read a poem by Irish poet John O’Donohue.
Among those also lighting candles were the co-headteachers of the Holt School where Mr Furlong taught.
Business secretary Alok Sharma, who is MP for the Reading West constituency, and Matt Rodda, MP for Reading East, also lit candles.
Earlier this week, loved ones gathered in the town to mourn the deaths of Mr Ritchie-Bennett, originally from Philadelphia in the US, history teacher Mr Furlong, and Mr Wails.
Floral tributes could still be seen outside the Blagrave Arms pub where the three men were regulars on Saturday afternoon.