Villagers carrying flowers gathered in the church in the center of Hrabove at the start of a procession to the crash site in nearby fields.
Friday's ceremony was to include the dedication of a small stone with a plaque. The commemoration was organized by local leaders and the Russia-backed separatist rebels who control the area.
It comes amid an escalating war of words over who was responsible for destroying the plane.
Ukrainian and Western authorities say the plane was downed by a missile fired either by rebels or Russian troops who allegedly back them.
The rebels and Moscow say it was hit by a Ukrainian warplane or a Ukrainian-fired missile.
New video released Friday by News Corp Australia, the arm of Rupert Murdoch's media empire in his own native country, shows a handful of the Russian-backed separatists who controlled and still control Hrabove at the crash scene on July 17, 2014, seemingly just after the plane came down on the outskirts of the rural village.
The debris is still smoldering as a senior rebel fighter videotapes his men picking through the wreckage and personal effects of the victims from on board Flight 17.
According to News Corp and the translation of the Ukrainian and Russian spoken by the rebels, the video seems to show the rebels surprised to find the remnants of a civilian airliner. The man with the camera is heard speaking to other rebel commanders via radio or telephone, discussing what they appear to believe was the shoot-down of a Ukrainian jet fighter.
One man asks where the remnants of the Sukhoi jet fighter are.
"Is there another plane?" the man asks. After hearing a response from someone on the phone, he says, "I understand. Keep the perimeter. Don't let civilians get through."
When another man at the scene asks about the remnants of a jet fighter, another rebel tells him, "there it is, it is the passenger plane."
At one point a rebel is heard saying "Malaysia," before asking in apparent consternation, "who gave them the corridor" to fly over the war-torn region.
While the video does not include any remarks proving it was the rebels who launched the missile presumed to have brought Flight 17 down, it does place them at the scene of the crash immediately after the incident, and appears to corroborate American and Ukrainian claims that the separatists fired on the Boeing 777 believing it was a Ukrainian military plane.
In a statement released on the anniversary of the crash, Ukrainian President Petro Poroshenko said the plane could not have been shot down without "a direct order from the highest political and military leadership" of Russia.
He went on to say that parts of eastern Ukraine under rebel control would eventually be reclaimed by Kiev, and that "a memorial to the 298 innocent victims of the barbarian act of terrorism" would be erected in Hrabove.
"With support from all free nations of the world we have enough strength to overcome it (separatist threat). The bits of Donbas, the entire Crimea -- will be back, in Ukraine. We will resurrect everything that has been destroyed, we will mend our wounds," said Poroshenko.
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