Sandie Bowen, 53, went missing from her home in Llandogo, near Monmouth, in August 1997.
Her husband, Michael Bowen was convicted of her murder in 1998 and has since been released from prison on licence.
Mrs Bowen's remains were recovered from Wentwood Reservoir, near Newport.
An inquest in March heard her body had been tied to a heavy ceramic sink.
The cause of death was not known.
Leading the service, funeral director Joanne Hume said, "Today is a day that Anita [Mrs Bowen's daughter] tells me she thought for many years would never come.
"We can't begin to imagine what those years have been like."
Mrs Bowen, who was originally from Kent, was described as "an adored mum, nan and friend to many" and a kind and friendly person who would help anyone.
In March, Anita Giles spoke of her relief at the news her mother's body had been found.
"Twenty years is a long time to grieve," she said. "We finally have got closure and I can lay her to rest."
A funeral has been held for a murdered Monmouthshire woman whose remains were found in a reservoir almost 20 years after her disappearance.