Local leaders, artists, and rappers were on hand for the tribute's reveal on Fulton Street in the Bedford-Stuyvesant section.
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Smalls, whose real name was Christopher George Latore Wallace, was killed 25 years ago on March 9, 1997.
He was leaving a music industry party in Los Angeles when a vehicle pull up alongside Smalls' SUV and started shooting.
Wallace was just 24 years old and at the height of his fame.
Smalls was killed six months after his former friend and rap rival Tupac Shakur was gunned down in Las Vegas.
The timing of both murders led some to speculate that they were linked to a so-called rap war between east coast and west coast hip-hop artists and their record companies.
Both cases remain officially unsolved.
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To mark the anniversary Wednesday, loved ones, elected officials and fans gathered on Fulton Street in Bedford-Stuyvesant for the mural's unveiling.
"After looking at this beautiful mural, talk about how we're going to eradicate gun violence that took a giant physically from us," New York City Public Advocate Jumaane Williams said. "But the answer to that is to change what is happening on the ground so people are not using that violence to communicate."
Wallace was born in Brooklyn, and the mural is just steps away from his childhood home.
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