The surrender by a British-led force at the garrison in Kut al-Amara (Kut in modern Iraq) is seen as the last Ottoman victory of the war, which ended in the defeat of the Empire and its German allies.
"Turkey is changing. We are remembering again our history that was forgotten," Prime Minister Ahmet Davutoglu said at a major ceremony in Istanbul.
President Recep Tayyip Erdogan told the event he rejected any view of Turkish history that only began in 1919, the year of the start of the War of Independence that would culminate in the founding of the post-Ottoman Turkish Republic in 1923.
"We throw a black blanket over our history which signifies disrespect to our ancestors and wrongs future generations," he said.
"We have regulated our official history for years in the way that... the British wanted," he added.
Turkey's rulers have been keen to use the 100th anniversary of World War I as a source of national pride, even though the war ended in defeat for the Ottoman Empire and would ultimately lead to its collapse.
Last year, the Turkish government placed great emphasis on celebrating the 100th anniversary of the 1915 Battle of Gallipoli where Ottoman forces resisted a ground invasion by the Allies.
'Foundation of the Republic'
The ruling Islamic-rooted Justice and Development Party (AKP) and Erdogan are eager to show the Ottoman Empire, whose Sultan ruled as the caliph of all Muslims, as a source of inspiration for modern Turks.
Signup to our newsletter and follow us on Facebook and Twitter!
But Davutoglu denied that the celebration of the victory at Kut marked any rejection of the modern Turkish Republic founded by Mustafa Kemal Ataturk in 1923 in the ruins of the Ottoman Empire.
"The spirit of Kut al-Amara is the most significant foundation on which our Republic has risen," he said.
"Kut al-Amara is a victory of all of us. Kut al-Amara is the victory of all peoples of the Middle East."
Some critics have expressed suspicion at the focus on a handful of Ottoman victories in the war, suggesting Turkey wants to overshadow darker pages such as the mass deportations and massacres of Armenians from 1915 that Yerevan considers genocide.
But Erdogan, whose politics mixes political Islam with a growing streak of nationalism, said Turkey was still conscious of how the Ottomans had ruled over Muslim lands from the Balkans to Arabia.
"Our physical borders might have been separated. But the borders in our heart have never been separated," he said.
The Siege of Kut began in December 1915 when joint British and Indian forces seeking to take Baghdad decided to hold their position in Kut rather than fall back further against advancing Ottoman forces.
With their food supplies running low, the Allied troops were besieged by the Ottoman forces for months as British troops sent to relieve them were beaten back in successive battles by the Ottomans.
The commander of the British-Indian forces, Charles Townshend, surrendered on April 29, 1916 and thousands of Allied troops who survived were taken prisoner.
Townshend however was held captive on a peaceful island off Istanbul, a notoriously luxurious incarceration where he was held as an honoured guest by the Ottomans. Up to his death in 1924, he faced accusations of betraying his troops.