As the torch arrived at the Bird's Nest a relay of Chinese athletes carried it full circle around the stadium before passing it to Li Ning.
In breathtaking scenes Li Ning held the torch aloft as he was lifted hundreds of feet above the ground on ropes. Once in the air he made another circle of the stadium imitating a running torch bearer.
Hanging beneath the cauldron he touched the torch to a fuse, sending plumes of fire high above the stadium and lighting the Olympic flame.
Li Ning became a hero for China in 1984, when he won six medals - three gold, two silver and one bronze - at the Los Angeles Olympics. An ankle injury forced him into retirement in 1988.
The dazzling opening ceremony, which lasted more than four hours, started with a performance by Chinese actors depicting the country's culture and history from ancient times until the present day.
The amazing show was followed by the 2008 Olympics theme song, which was performed by British pop star Sarah Brightman and famous Chinese singer Liu Huan in Chinese language.
The theme song signaled the beginning of the parade of Olympic teams, which comprise some 16,000 athletes from 205 countries.
After the parade, the presidents of the International Olympic Committee and the 2008 Olympics Organizing Committee delivered their welcome speeches and Chinese President Hu Jintao declared the Games open.
The Beijing Games, which will run through August 24, will be attended by the heads of 85 countries and about 10 monarchs. They are expected to attract a record television audience of some 4 billion people.
