Grouped on top of the Ulrichsberg mountain in the Carinthia province, a stronghold of the far-right nationalist leader Jorg Haider, about 500 people paid homage to the Third Reich soldiers' "sense of sacrifice."
Among the supporters were representatives from veterans' groups and from the Austrian army, as well as younger neo-Nazis and retired soldiers carrying the banners of the Flemish SS volunteers.
"But we also want to remind people that we only did our duty" in fighting with the Wehrmacht and Waffen SS after the Anschluss between Austria and Nazi Germany in 1938.
Skinheads from several European countries applauded the proceedings, while women served out schnapps to stave off the cold weather.
Held since 1958 amid tight security, the gathering sparks controversy every year, not least because of its official status. Anti-fascist demonstrators staged a protest near the venue Sunday.
Haider triggered international outrage at the event in 1995 when he paid tribute to the Waffen SS, describing it as a group "of honest citizens who knew how to stay true to their convictions."
Valentin Sima, a historian at Klagenfurt University, told AFP that since then, the event's organisers had asked that the more provocative elements of the gathering -- such as the Kameradschaft IV (Comradeship 4) -- a veterans organisation of former Waffen SS members, be toned down.
Appearances by Gudrun Burwitz, the daughter of the former Waffen SS chief Heinrich Himmler, have also become more rare, she added.
Nevertheless, the memorial on top of the Ulrichsberg mountain still carries commemorative plaques dedicated to the Kameradschaft IV as well as to Spanish, Flemish, Norwegian, Croatian and Danish Waffen SS volonteers.
Those who received the Ritterkreuz (Knights cross) -- the second highest military order of the Third Reich -- are also honoured.
Such is the controversy still surrounding the Ulrichsberg gathering that Haider, facing legislative elections in a week, chose not to deliver a speech at Sunday's 50th commemoration.
Harry Cooper, head of the American Neo-Nazi Sharkhunters organisation, who sent a delegation of 20 members, said the event was unique of its kind because one could still pay tribute to soldiers who has been "honourably defeated."
Meanwhile, Wolfgang Zinggl, an Austrian Green deputy who acted as an observer at the gathering, told AFP that his party had lodged a complaint over the commemorative plaques and the fact that the army had attended the event.
The owner of the site, Peter von Goess, whose father Leopold fought in the SS, said the complaint was "without purpose."