The boat, which was one of the largest in the world, was travelling to its home port of Liverpool from New York when it went down, off the coast of Ireland.
A minute's silence was heard in the city at 14.10 - the time of the attack one hundred years ago.
Revd Dr Crispin Pailing led the service at Liverpool Parish Church.
Speaking to Premier before the event, he said: "It's also about the human tragedy, that loss of life, and some of the appalling moments that happened as people were fighting to survive in the 18 minutes it took for the ship to sink.
"We hear of a family where the children had to be split up between other family members where there was a serious health issue caused by what happened, and great financial tragedy and poverty as a result.
"We're going to be hearing the story of Jesus calming the storm and the waves, and essentially that story is one of transformation... I want to talk about how their lives were also transformed in those moments of selflessness, of heroism and the way that they came to confront the reality of their condition before God.
"At that moment when the torpedo struck it didn't matter you were carrying a first-class ticket or a third-class ticket, and something about humanity has to come out in the preaching that we do."
Meanwhile the owner of the ship, Cunard had a memorial plaque dedicated during the service and actors Joe McGann and Roy Carruthers read first-hand accounts from survivors.
A walk of remembrance to the Lusitania's salvaged propeller, now located at the city's Pier Head also took place this afternoon.
Hear Revd Dr Crispin Pailing talking to Premier's Aaron James.