Houston’s mother Cissy and daughter Bobbi Kristina wept uncontrollably as the casket left the New Hope Baptist Church to the tune of I Will Always Love You after a four-hour service.
Houston will be buried beside father John Russell Houston at Fairview Cemetery in Westfield on Sunday.
The 48-year-old was found dead in a hotel in Los Angeles a week ago.
Officials are waiting for the results of toxicology tests that will help them ascertain how she died.
‘Gave me strength’
Among the mourners at the service were Oprah Winfrey, Alicia Keys, Mariah Carey, Forest Whitaker, Jennifer Hudson, Roberta Flack and Chaka Khan. Houston’s cousin, Dionne Warwick, presided over the ceremony.
During the service Kevin Costner, who starred opposite Houston in The Bodyguard, paid tribute to what he called the “sweet miracle” of her life.
“Whitney returns home today to the place where it all began,” he said and urged the nation to “dry our tears, suspend our sorrow and perhaps our anger”.
He spoke about how they built a friendship, despite their obvious differences, exchanging stories about their childhood and growing up in a Baptist church community.
Stevie Wonder performed the song Love’s in Need of Love Today, and Alicia Keys Send me an Angel. There were also musical tributes from R Kelly, BeBe and CeCe Winans, and the Rev Kim Burrell.
Aretha Franklin had been due to sing at the service, but the Houston family said she was not able to attend as she was unwell.
There were also tributes from Clive Davis, her musical mentor, and Houston’s sister-in-law Patricia Houston, who said: “She was someone with a charmed and a beautiful life, sometimes misunderstood, even by herself’.’
Houston’s ex-husband, Bobby Brown, arrived at the service, but AP news agency reported that he left again shortly afterwards in an apparent disagreement over seating arrangements.
Police had cordoned off streets surrounding the funeral, as pockets of fans gathered outside the perimeter.
The BBC’s Laura Trevelyan, in Newark, says for these fans Whitney Houston’s rise from New Jersey choir girl to pop princess had been a source of great pride and her frailties were treasured just as much as her vibrant voice.
One fan told her: “I wouldn’t be anywhere else. Her music helped me through my bad times.”
Another said: “I have struggled with addiction, just like she did, and she gave me strength.”
Houston was one of the world’s leading musical artists from the mid-1980s to the late 1990s, selling 170 million records worldwide.