The 8ft guitar statue has been erected in East Park, where he worked as an attendant before gaining musical fame working with David Bowie in the 1970s.
Ronson led Bowie's backing band, Spiders From Mars. He died in 1993, aged 46, after developing liver cancer.
His sister Maggie Ronson said: "He absolutely loved his gardening job so this couldn't be more perfect.
"We're very, very happy and I'm sure he'd be very proud."
More on this and other stories from East Yorkshire and North Lincolnshire
Councillor Mary Glew, who unveiled the sculpture at a ceremony, said it was "a fitting tribute" to the musician who "left an enduring legacy to the world of contemporary music".
The sculpture was designed by 18-year-old Hull College student Janis Skodins, whose artwork was chosen in a competition.
It has been installed in the Michael Ronson Garden of Reflection, near the park's pavilion.
The sculpture is among 100 plaques and memorials honouring notable people across Hull for its City of Culture celebrations.
Fellow musician Trevor Bolder is also due to be honoured.
As well as working with Bowie, Ronson recorded several solo albums, the most successful of which was Slaughter on 10th Avenue, which reached number nine in the UK album chart.
He also played on, produced or arranged songs for artists including Lou Reed, Bob Dylan, and Morrissey.

The Murrayfield side are seventh in the table and face a difficult run-in as they seek a top-four finish.
"We have five huge games coming up and I think we need to win all of them if we want a shout of the play-offs or even the top six," said Dickinson, 32.
"It's really tight in the middle of the table."
Dickinson, with Willem Nel and Ross Ford part of an all-Edinburgh first-choice Scotland front row, has returned from international duty for the run-in.
The immediate target is a win in Wales on Sunday against Newport Gwent Dragons before a home match against second-bottom Zebre five days later.
Away games against Leinster and Munster follow before a Murrayfield date against Cardiff Blues.
"We have to think about winning every game, that's what we have to target, starting with Dragons away which is always a brutal encounter," continued the former Gloucester prop.
"It's a real tough run-in. We just have to take each game as it comes. We have a tough turnaround Sunday to Friday."
Asked to pinpoint what has led to Alan Solomons' men losing five of their last six matches in all competitions, he replied: "It's hard to know exactly what's gone wrong.
"We have let ourselves down with errors, a couple of soft tries at times, which have killed us.
"Sometimes these breaks between the Six Nations (games) don't help, you lose a bit of momentum, but this morning we had a good session so we are looking at things we need to improve on, just little things.
"The guys who haven't been away with the national squad are good enough to win these games.
"It's just touching up on our detail and being clinical and finishing the opportunities that we get and in the last few games we just haven't managed to do that."
A sculpture honouring Spiders From Mars guitarist Mick Ronson has been unveiled in his home town of Hull.
[NEXT_CONCEPT]
Edinburgh will probably need to win all five of their remaining Pro12 matches to secure a play-off place, claims loosehead prop Alasdair Dickinson.