The carnival procession halted and the blaring sound systems fell silent in memory of those killed -- at least 80 people -- in the June 14 inferno.
"It was a sad moment. We took our time. It was very, very painful," said Odella, a teacher in her 50s, her voice breaking with emotion.
"But we remembered the people that died, and so we're here together in a community spirit. It was wonderful," she told AFP.
Feathered dancers, steel bands and earth-shaking sound systems featured in the vibrant celebration of British Caribbean culture.
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But the two-day festival has been careful to remember the victims of a tragedy which stunned Britain, and took place just a stone's throw away.
The estate where the tower stands was fenced off from the main carnival procession, out of respect for mourners.
The release of dozens of white doves marked the start of the festivities yesterday, followed by a minute's silence.
"But I think today is a good day. We needed this to bring some happiness... And the sunshine helps a lot."
Ashley, a 29-year-old bus driver, said it was better to mark the tragedy at the carnival rather than cancelling the festivities, which he said would mean "it gets swept under the carpet and unsaid".
"It's better putting it out there," he told AFP.
"You still see the posters up: people still need aid, people still need help. It's nice that everyone's gone out of their way and made it a little bit special this year for people, for Grenfell."
Yesterday, London Mayor Sadiq Khan pledged to "make sure those responsible are held to account".
Clarrie Mendy, a relative of fire victims Khadija Saye and Mary Mendy, said she felt the carnival had been a healing experience for those grieving.
"People came out with respect and with Grenfell in mind.
"We've told people, 'come and have a good time, we've been fractured but we're healing, come down here and join us in our healing'."
She added: "A lot of people are finding their voice and saying this is the first time since it happened they've actually found a voice to speak."
The London Ambulance Service said it had treated 344 patients during the first day of the festivities, many for alcohol-related injuries.
Police told AFP that 122 arrests were made yesterday, many for drugs offences. Some 27 arrests had been made in an early count today.
The carnival started in 1966 when local resident Rhaune Laslett organised a "jump up" for local children in Notting Hill, which at the time was considered a slum but is now one of the most expensive areas in London.
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