Renowned Indian conductor Zubin Mehta has conducted a concert by the Bavarian State Orchestra in Indian-administered Kashmir.
Nearly 2,000 guests attended the concert, hosted by the German embassy in the Shalimar Gardens in Srinagar.
Zubin Mehta said he had "waited for this moment" for all his life and hoped "to spread the message of peace".
But separatists protested, saying the concert was an attempt to legitimise Delhi's rule in the disputed region.
Srinagar and other parts of the Kashmir Valley were completely shut down in response to a day-long strike called by the veteran separatist leader Syed Ali Shah Geelani.
Markets and businesses were closed and Srinagar ground to a halt.
Hundreds of policemen and paramilitary troops were deployed in the city to provide protection to the event.
Checkpoints were put up across the city and all vehicles were checked and people were frisked.
Kashmir, claimed by both India and Pakistan, has seen an armed insurgency against Indian rule since 1989.
In recent years violence in Kashmir has abated from its peak in the 1990s, but the causes of the insurgency are still far from resolved.
'A positive wave'
"I am very very happy today. I have waited for this moment all my life," Mehta said at the start of his concert.
"There are those we have hurt inadvertently. I promise next time we shall do this with everyone in a stadium where everyone can come, so it won't be a select few. When the music starts, a positive wave goes from this stage everywhere."
The German ambassador Michael Steiner said the concert bridged the distance between cultures.
"The distance between Munich and Srinagar is 7,076km. Tonight, music reduced this distance to zero."
This is the first time a cultural event of this scale has been held in Kashmir and Mehta and the 98-member orchestra received a standing ovation, the BBC's Geeta Pandey reports from Srinagar.
The concert was broadcast live on dozens of television stations around the world.
Meanwhile, a parallel protest concert was held by human rights activists at the Sher-e-Kashmir park.
Khurram Parvez, one of the protest concert's organisers, said many participants were not allowed to enter the venue, and that their stage had been confiscated.
"Legitimising an occupation via a musical concert is completely unacceptable," he told the BBC.
The German embassy and Mehta denied that their concert had any political motives.
Speaking in the Indian capital, Delhi, on Friday, Mehta said "music is the only language I know and hope to spread the message of peace with this performance".
The German ambassador said they were "not trying to paint a rosy picture of Kashmir" and that concert aimed to "reach the hearts of the Kashmiris with a message of hope and encouragement".