A total of 40 families from both Islands - led by the Seigneur of St Ouen, Helier de Carteret, who had been granted the rights to the island by Elizabeth I - settled in Sark in 1665 in an attempt to protect it from French invasion.
On Thursday, hundreds of islanders and guests, including descendants of the founding colonists - and the Lieutenant Governors and Bailiffs of Jersey and Guernsey - gathered in the grounds of Le Manoir, Helier de Carteret's manor house, to celebrate Sark becoming a Crown Fief.
The Seigneur of Sark, Michael Beaumont, said the feudal system that came with Elizabeth's Royal Charter had served Sark well until 2008 when the island's constitution and system of government was reformed.
De Carteret took over one-sixth of Sark, and divided the remainder into 40 parcels of land, creating the system of tenements that still exists.
Mr Beaumont said: 'The feudal system of the day was ideal for a small island that did not require the sophistication or bureaucracy of a larger state and served us well, with minor alterations for many years.'
After Mr Beaumont renewed his and Sark's oath of loyalty to the Crown, the Cercle de Carteret, members of the de Carteret family from all over the world, presented him with a commemorative plaque.
The Seigneur of St Ouen, Charles Malet de Carteret, who was also present with members of his family, said he was proud to be representing the family on such a special day for de Carterets and Sark.
He said: 'It is an extraordinary event and a wonderful tribute to an almost unique family connection.'
The island's historic ties with the UK were recognised in London on Thursday where Sark's flag was flown from the UK Ministry of Justice, the department of the British Government that manages the constitutional relationship with the Crown Dependencies.
Sark's celebrations continued yesterday with guided walks and a boules match. A round-island cruise and a family fun day are planned for the weekend.
Jersey is marking the anniversary with a sea journey, never attempted before, and due to take place today when 65 rowers in 13 boats - nine from Jersey and two each from France and Sark - will attempt to row from L'Etacq to Sark to commemorate the colonists' voyage.
Next Saturday, the ancestral home of the de Carterets, St Ouen Manor, will host a celebratory fete.