President Bush and civil rights leaders broke ground for a memorial to Martin Luther King and the first monument to an African-American on the National Mall.
"The King Memorial will stand on a piece of ground between the Jefferson and Lincoln memorials and . . . it will unite the men who declared the promise of America and defended the promise of America with the man who redeemed the promise of America," Mr Bush said.
Nearly 5,000 people, including TV talk show host Oprah Winfrey, former president Bill Clinton and poet Maya Angelou attended the event to celebrate the life of the Nobel Peace Prize winner.
Speakers quoted King's sermons and speeches and paid tribute to his belief that non-violent protest could help end discrimination against black Americans.
"As we turn these shovels we are just beginning to turn the dirt, and as we turn this dirt at this ground, let us go back to our communities and turn the dirt there," said former King aide Andrew Young, urging attendees to continue the slain leader's work against racism, poverty and violence.
Construction begins on the crescent-shaped four-acre site in the spring and is scheduled to be completed in 2008.
The memorial's centrepiece will be a "stone of hope," a boulder engraved with King's image and words from his "I Have a Dream" speech, which he delivered on the steps of the Lincoln Memorial in 1963.
Organisers have already raised $63 million toward the estimated $100 million cost of the project, which is located on the National Mall, a large park at the centre of Washington that contains memorials to presidents and the nation's wars.
When the memorial is finished, 40 years will have passed since King was shot to death on the balcony of a hotel in Memphis, Tennessee.