"Our country has done well," Zuma said at a ceremony held two decades after the first all-race election that saw Nelson Mandela become the country's first black president.
"We all have a good story to tell."
"We have moved closer to our cherished dream of a united non-racial, non-sexist and democratic South Africa," he said at the "Freedom Day" ceremony held in the gardens of the Union Buildings, the seat of government in Pretoria.
But its successes have been sullied by mismanagement and high-level corruption blamed largely on the ANC-led government, as well as a legacy of racial inequality, poverty, rampant crime and a lack of basic services.
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The government failings have become a rallying point for the opposition ahead of next month's general election, the fifth since the end of sanctioned racial oppression.
But Zuma -- who himself has been tarnished by corruption allegations -- used his speech to warn rivals not to dismiss the "tremendous" gains in the country of 51 million people.
"We must not deny or downplay these achievements, regardless of our political differences... At any given time, including the election period."
However, Nobel peace laureate Desmond Tutu, while conceding that two decades of freedom have seen a "heck of an achievement", said he was pleased Mandela was not alive today to witness the slow pace of transformation.
"I'm glad that Madiba is dead," Tutu was quoted as telling South Africa's Sunday Times. "I'm glad that most of these people are no longer alive to see this."
Zuma, who is seeking re-election, urged South Africans to turn out in their millions on May 7 to vote.
"Our freedom was not free. It came about through blood, sweat and tears. That is why we must defend it at all cost," said Zuma.
Freedom Day was marked by a full military parade including a 21-gun salute and fly-pasts as well as prayers, music and dance.