Mayor Michael Bloomberg, Governor Andrew Cuomo, City Council Speaker Christine Quinn, Consul General of Israel in New York Ido Aharoni and other local and international officials were among those marching in the parade.
They joined 35,000 marchers, 17 bands and 30 floats in the parade that started at 11 a.m. from 57th Street to 74th Street.
This year's theme focused on the arts in Israel.
Marchers carried paintings, collages, and tapestries to show the diversity of Israel and its people.
In the evening, the Empire State Building will beam the Israeli colors to celebrate the 1948 creation of the Jewish state.
Also later Sunday, Israel's national soccer team is scheduled to play the team from Honduras in Queens.
Security was tight along Fifth Avenue. Police Commissioner Raymond Kelly watched over the lineup and helicopters hovered overhead.
Kelly told Eyewitness News that anytime there are large crowds in the area, the NYPD puts in place a counterterrorism overlay.
"The Boston Marathon bombing has had an effect on what we do, it's only common sense to do that," said Kelly, "So [we] brought more resources in play, yes some of the bomb dogs will be working, they'll be walking through the crowd, behind the crowd that sort of thing."
The clearly noticeable increase in security was visible both on the avenue and on the side streets.
"I see more police, but there are lots of not so obvious changes that people don't know that I can't tell you about but that are very good," said Senator Charles Schumer.
Security aside, many at the parade were watching and waiting to see one person in particular - Mayoral Hopeful Anthony Weiner.
"He's Jewish, and he wants to respect his heritage, I totally respect that," said parade spectator Valerie Shalit, "what he does behind closed doors is really nobody's business."
However, some spectators booed the former Congressman.
"The city of New York and the people of the US are all moral people," said Paul Lebowitz, "he showed immorality, and should have better judgment than that."
This is the first time Weiner has marched in the parade since 2010. He told Eyewitness News that he was thrilled to be back.
He kept a low profile the last two years, as the now infamous photo scandal played out.
When asked why he wasn't marching with the rest of the politicians near the front of the parade, Weiner responded,
"I'm always separate from them, because I'm different from them."