The sportsman won a gold medal for Great Britain in the men's PT2 triathlon in Rio, adding to his haul of world and European titles.
Lewis said: "It's amazing to be here and for everyone to come out like this."
Paralympian Jack Rutter joined Lewis in the open top vintage bus procession.
Rutter led Great Britain's Paralympic cerebral palsy seven-a-side football side at the Rio games.
The parade went from Newerne Street via Bathurst Park Coronation Gates to the Pavilion, where a reception was held.
Lewis said it was more emotional to see everyone turn out for the homecoming than crossing the finish line in Rio.
"I'm so proud to be from Lydney and to be here with everyone.
"This medal means so much to me but the people of Lydney contributed to this," he added.
His wife, Becky Lewis, said: "I'm very proud, he's one in a million."
Hundreds of people turned out to cheer gold medal winning Paralympian Andy Lewis in Lydney at his homecoming celebration on Saturday afternoon.