Almost 250 countries and international organisations are showcasing their culture in an event themed around sustainable development.
Many are doing so in pavilions with radical architecture.
World leaders, including France's President Sarkozy, are attending the lavish opening ceremony.
"Expo 2010 Shanghai is now open!" Chinese President Hu Jintao declared during the gala opening, in which 2,300 performers and musicians from all over the world took part.
They were celebrating the Expo slogan: "Better city, better life in music and dance".
Tens of thousands of fireworks and lasers then lit up the city's riverfront - in what organisers promised would be the biggest-ever multimedia event, the BBC's Chris Hogg in Shanghai says.
Some 70 million visitors - mostly Chinese - are expected to visit the Expo, which will be open for the next six months.
Chinese local media report that the cost of staging the event could be as much as $58bn (£38bn) - more than was spent on the Beijing Olympics in 2008. Some estimates say this figure could eventually be even higher.
Shanghai has increased security measures drastically in preparation for the event. An additional 8,000 police officers have been brought in to help Shanghai's 46,000-strong police force to patrol the city, Chinese state media says. I have copy this news from BBC News (http://news.bbc.co.uk/).
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