The red, white and blue flag is seen both as an icon of Americana and a symbol of racism and slavery. Its removal from South Carolina's State House building follows the murder of nine black churchgoers in Charleston.
US President Barack Obama has described the removal of the Confederate flag from outside the State House in Columbia, South Carolina as a "meaningful step towards a better future."
The emblem, which features a star-filled blue cross set against a red background, was lowered from outside the legislature on Friday after a renewed fight by civil rights campaigners. Thousands of people gathered to watch and cheer the removal of the Civil War-era battle flag during a six-minute ceremony.
South Carolina lawmakers bowed to pressure and voted to remove the icon after hours of impassioned debate about what it stood for.
The controversy surrounding the flag resurfaced after the murder of nine black churchgoers in nearby Charleston by a young white supremacist last month.
The alleged killer, 21-year-old Dylann Roof, had been photographed brandishing both firearms and the flag, which is a symbol of the Confederacy.
Civil war-era symbol
Between 1861-5, eleven southern US states formed the Confederacy in an attempt to secede from the United States. Their mostly agricultural economies relied on black slaves and for many, the flag which marked their secession has remained an icon of racism and enslavement.
But the flag has also emerged as an icon of Americana and a memorial to those killed fighting for the Confederacy.
The backlash against its use has grown following the church massacre on June 17, leading major retailers to withdraw it from stock, and country music acts to stop flaunting it at their concerts.
Its final lowering in South Carolina was witnessed by families of those killed in the Charleston church massacre and was welcomed by lawmakers and rights campaigners.
Republican Governor Nikki Haley, who signed the order into law on Thursday, described its lowering as a "day that we can all say that we have come together as a state."
The National Association of the Advancement of Colored People said by removing the flag, the state of South Carolina had "denounced an odious emblem of a bygone era."
The flag is due to be displayed at a Confederate museum in the city.
FBI's deadly error
Hours after the flag was taken down, the FBI revealed that the gunman charged with the massacre should not have been allowed to purchase the weapon used in the attack.
Weeks before the shooting, Dylan Roof was arrested and admitted to illegal drugs possession, which should have disqualified him from the gun purchase he made in April.
But an FBI background check failed to spot details of Roof's arrest and allowed the transaction to proceed.
The agency says it plans to review procedures for criminal background checks in gun transactions.
mm/bk (AFP dpa, Reuters)