President Barack Obama and first lady Michelle Obama were among the dignitaries at the funeral. Inouye died Dec. 17 of respiratory complications. He was 88.
Sen. Inouye was the first Japanese-American elected to both houses of congress. He also served 50 years in the senate, making him the second-longest serving senator in U.S. history.
The cemetery, a strikingly beautiful site located in an extinct volcano, is the final resting place to thousands of World War II veterans. More than 400 members of the storied Japanese-American 442nd Regimental Combat Team - of which Inouye was a part - are buried at the site.
A 19-gun cannon salute was fired as Inouye's coffin arrived at the cemetery. The service also featured a flyover by F-22 military jets and the playing of "Taps" by Democratic Sen. Jon Tester of Montana.
Inouye's widow, Irene, who was seated with the president and first lady Michelle Obama in the front row, dabbed her eyes as a band of bagpipes and drums band played "Danny Boy."
Inouye volunteered for a special U.S. Army unit of Japanese-Americans and lost his right arm in a battle with Germans in Italy. That scratched his dream of becoming a surgeon and he went to law school and into politics instead.
The Associated Press contributed to this report.