It’s been unveiled at the site of the former US Naval Communications Station, now home to Foyle College.
The memorial honours those who served between 1943 and 1977 when the US Navy was based in Derry.
A Stars and Stripes flag belonging to the last ever commander of the Derry base has also been raised at the site.
Around 40 sailors once stationed in Derry returned to the city to see the memorial unveiled and Captain Tom McKeown’s flag raised.
A flag flying at the base on the day US President John F Kennedy was assassinated in 1963, then taken down to mark his passing, was today raised to half mast.
Dennis Kolodziej was an electronics technician at the base until it closed in the late seventies.
He says he remembers the day the base closed its doors for the final time.
“It was a very sad day when the base closed, I would have loved to stay in Derry,” Mr Kolodziej said.
“I had orders to go back to the States to be based in Florida but I turned them down because I loved Derry so much.”
He also married a woman he met while stationed in Northern Ireland.
“I married a Derry girl. I love coming back to the city. If it wasn’t for our grandchildren, I would move to Derry permanently.”
Captain Tom McKeown’s flag now flies on an original flagpole from the Derry base.
It was lowered on 30 September 1977, the day the base closed.
And it also marked the end of the long relationship between the city and US Navy.
Jim Sullivan, President of the US Navy Alumni Association, said his time stationed in Derry had a lasting effect for him.
“The people here in Derry welcomed us into their city, their hearts and their homes. It stays with you.
“It has been a second home to me even though 55 years have gone by,” Mr Sullivan added.
The US Navy was first stationed in Derry during World War Two, a conflict in which the city played a pivotal role.
Base One Europe, the US Navy’s operating base in the North of Ireland, was vital to the protection of convoys in the Atlantic and, at one time, 140 Allied escort ships were based on the River Foyle.
The US Navy maintained a presence in the city for a further four decades until the closure of the Communications Station in September 1977.
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