The virus is under control in Hong Kong with no major signs of a rebound, the city's leader John Lee said.
BBC reports under the mandate, which began in July 2020 and lasted for 945 days, people could be fined up to HK$5,000 (£530; $640).
"With the removal of the mandate, Hong Kong will return to normalcy," Mr Lee said on Tuesday.
"In this year and the coming year, we will go all out for the economy and development at full speed."
Before Wednesday, people living in Hong Kong had to wear a mask in any public area.
On social media, many residents expressed elation and relief that the day of unmasking had "finally" come.
Some criticised the rule's duration and its sudden scrapping - amid wider criticism of the city's pandemic policies for the past three years.
However many locals could be seen still wearing masks on Wednesday, local media reported.
Hong Kong has largely followed mainland China's lead in efforts to tackle the virus, including attempts to eliminate it with a "zero-Covid" strategy.
Other Covid curbs in Hong Kong included strict quarantine rules, limitations on the number of people gathering in public places, as well as restricting visitors in nursing homes.
Most of these curbs were rolled back at the end of last year. But some remain - primary and secondary school students still need to test daily for Covid, although some reports say this measure could be lifted later this month.
Many residents and business owners have said such tough rules damaged Hong Kong's economy and international standing. The city's gross domestic product fell by 3.5% last year.
In a bid to woo foreign visitors, the Hong Kong government has announced plans to give away half a million air tickets - beginning on Wednesday.
Masks are still worn in several countries in Asia. In South Korea, for instance, they are still required on public transportation, as well as in hospitals and pharmacies.
The Japanese government has said it will ease mask-wearing guidelines on 13 March, recommending masks only on trains and buses during rush hour, or where public transportation is particularly congested. Masks have never been mandatory in Japan, but most people have been wearing them.
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