The artwork showing Manhattan as a yellow submarine in a sea of blue is on display at the Ellis Island National Museum of Immigration. Music executive Jimmy Iovine, U2 rocker Bono, and his bandmate The Edge, covered the cost for New-York based Czech artist Peter Sis to design the commemorative piece.
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"This is a very happy moment for the family," Ono said.
At the event, City Council Speaker Melissa Mark-Viverito declared July 29 as John Lennon Day.
Bono, who is coming off an eight-show run at Madison Square Garden, also gave remarks about the significance of the tapestry being at Ellis Island and claimed Lennon as Irish.
"Let's claim him. In fact, let's claim all the Beatles not as immigrants but as Irish," Bono said.
The tapestry unveiling marks the 40th anniversary of Lennon getting his green card.
"John had to fight to get here," Ono said. "John had to fight to actually be accepted here."
Lennon who is originally from Liverpool, England, appeared in several deportation hearings in the early 1970s. He initially was not granted U.S. residency, but that decision was overturned in 1975.
Ono said Lennon was determined to stay in the U.S. partly because of the change he believed could happen.
"He was really, really concerned about what's happening in the world, and he knew that what we do in America is really going to affect the whole world," Ono said.
Ono, a peace and human rights activist, said she will continue communicating with the public through art and music.
Her artwork is on display at the New York Museum of Modern Art at an exhibit called "Yoko Ono: One Woman Show, 1960 -1971." The show ends in September.
The avant-garde singer also is working on a new album, Yes, I am a Witch Too, as a sequel to her 2007 cover and remix LP. The record is expected to be released January 22, 2016.
Ono serves as an executive producer and is collaborating with her son, Sean Lennon, Death Cab for Cutie, Tune-Yards, and Cibo Matto, as well as other artists.