Shouting slogans in support of the "resistance," the demonstrators held up banners and placards inscribed with phrases like, "Now we are free" and "Fallujah is the flame of the resistance." In the centre of the city surrounded by the Iraqi army, demonstrators carried posters bearing photos of apparent insurgents, faces covered and carrying weapons.
They also held up pictures of US soldiers killed and military vehicles destroyed in the two major offensives against the city in 2004. The demonstration was dubbed the first annual "festival to celebrate the role of the resistance."
The United States is due to pull out the last of its troops from Iraq by the end of the year, more than eight years after the invasion to topple Saddam Hussein.
Fallujah, home to about a half a million people 60 kilometres (40 miles) west of Baghdad, was home to some of the first anti-US protests in the aftermath of the 2003 invasion, in May of that year.
At the time, Fallujah residents were content to throw only their shoes at US soldiers. But in March 2004, four American employees of the US private security firm Blackwater, since renamed Xe, were brutally killed in the city.
That year, the US military launched two massive offensives against Fallujah, signs of which are still visible today in collapsed buildings and bullet holes in walls. The first offensive in April aimed to quell the burgeoning Sunni insurgency but was a failure -- Fallujah became a fiefdom of Al-Qaeda and its allies, who essentially controlled the city.
In November, a second campaign was launched, just months before legislative elections in January 2005. Around 2,000 civilians and 140 Americans died, and the battle is considered one of the fiercest for the US since the Vietnam war.