Steve Belam attended the event in Castlewellan Orange Hall on Saturday night in memory of David Mulley, who was killed in the town on March 18, 1986.
The hall was packed to capacity.
Both men had been members of the Royal Green Jackets.
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Rifleman Mulley was killed instantly by a booby-trap bomb as he crouched in the doorway of a derelict pub during a patrol in the town.
Other soldiers were also seriously injured, either physically or psychologically, in the attack.
Mr Mulley, who was 20 at the time, was single and from Sunderland in Tyneside.
Mr Belam, who was 19, recalled the moment his colleague was killed.
“Dave was killed instantly,” he told the News Letter.
“He was a very good soldier. I was quite shocked by his death. We were not expecting it.
“The last words he said to me were, ‘Be careful out there’ – because we had been stoned in Castlewellan the night before.”
Mr Belam was pleased to see that neither his former colleague or the atrocity itself had been forgotten.
“It was evident that people’s passions still run high about it,” he said.
“I think people felt a bit embarrassed about the way we were treated in the village - not even regarding the attack itself, but our treatment afterwards.
“It was the glee and happiness people seemed to have over the death of somebody - there was jeering and cheering on the streets after the bomb.”
It was the only such experience Mr Belan had in Northern Ireland in four-and-a-half years of service.
“But it felt like those gathered on Saturday night wanted to put all that right and honour Dave,” he said.
“I was very moved by the whole thing.”
Castlewellan Victoria Development Association (CVDA) organised the ceremony, which included a two-minute silence and the Last Post.
“The young man had never expressed any opinions about the people or place - he just wanted to do his job as a soldier and protect the community,” said CVDA secretary John Smyth.
The plaque was unveiled and a wreath laid by former colleagues Steve Belam and Dave Murray, section commander, Royal Green Jackets.
Mr Mulley’s sister, Linda Hall, was unable to attend but wrote to thank the organisers.