The stone has been placed at the Gallow Ha’ in Kirkwall where the brutal executions of those found guilty of witchcraft took place.
Inscribed in the memorial are the words ‘they wur cheust folk’.
Dr Ragnhild Ljosland, of the Institute for Northern Studies at the University of Highlands and Islands, said it was important to remember the ‘innocent’ victims of the witchcraft trials, which were held in Orkney between 1594 and 1645.
Dr Ljosland said: “It is important to remember these people, firstly because they were innocent by definition.
“Now we realise that it is not possible to do the things they were accused of. It is not possible to raise a storm or to influence the health of humans by going anti-clockwise around someone’s house.
“It is also about reminding ourselves not to judge our fellow human beings too quickly.”
According to the Survey of Scottish Witchcraft Database, compiled by Edinburgh University, there were at least 72 people in the Orkney Isles, including seven men, who were accused of witchcraft.
They include Anie Tailzeour, who also went by the name of Rwna Rowa, who was also charged with sorcery and superstition.
It was said she was practiced a ritual using three hairs from a cow tail and three of her pubic hairs, among other items, to move spirits from one person to another.
When one of her accusers claimed to have see Tailzeour in the face of one of a number of cats he encountered on his way home.
Tailzeour went on trial on July 15, 1624 and was later strangled and burned in Kirkwall, close to the spot where the memorial now stands.
An inauguration of the memorial was held in Kirkwall on Saturday with music, theatre and song performed in memory of those who died.
The introduction of the Witchcraft Act in 1563 made witchcraft and consulting witches a capital crime.
More than 4,000 people were accused of witchcraft with torture used to extract confessions and secure guilty verdicts.
The Orkney memorial was created by Colin Watson, who served as the stonemason at St Magnus Cathedral in Kirkwall for 30 years.
The original idea to create the memorial came from Helen Woodsford-Dean, a tour guide, archaeologist and celebrant in Orkney.