The former Flames goalie had his No. 30 jersey raised to the rafters at Pengrowth Saddledome on Tuesday night before Calgary took on the Chicago Blackhawks.
Vernon told the 19,289 enthusiastic fans in attendance that it would never have been possible if not for the tremendous support he received in the city.
"I was born and raised here," he said. "I played all my minor hockey here. I started and finished my pro career here. I developed a tremendous love for the game here in my hometown of Calgary."
Joined by his wife and four children for the ceremony, Vernon was welcomed to the microphone with a standing ovation and chants of "Vernon! Vernon!"
His jersey joined Lanny McDonald's No. 9 as the only two sweaters retired by the Flames. It all felt a bit surreal for Vernon.
"I never dreamed that I'd be standing here this evening to watch my jersey joining that of the legendary Lanny McDonald," he said.
The 1989 playoff run was the pinnacle of Vernon's 11 seasons in a Flames uniform. It was an underlying theme to the evening's 47-minute pre-game ceremony.
After going the distance against Vancouver in the opening round that year, Calgary lost just three games the rest of the way. The Flames run was capped by a Game 6 victory in the Stanley Cup final over the Canadiens, when they became the first visiting team to hoist the trophy in Montreal.
"Winning the Stanley Cup as a member of the Calgary Flames was such an honour for me, because I am a Calgarian," said Vernon, who also won a Cup with Detroit in 1997.
In the eight-minute video montage that began the ceremony, fans cheered Vernon's most famous save, a glove hand grab of a shot from Vancouver's Stan Smyl in overtime of Game 7 in 1989.
The breakaway stop kept the Flames alive and they eventually won the game on Joel Otto's goal.
Eight teammates from that 1988-89 Flames team were on hand for the festivities, including McDonald, Joe Nieuwendyk, Al MacInnis and Theoren Fleury.
Also in attendance was former Flames president and GM Cliff Fletcher, who selected Vernon in the third round of the 1981 entry draft.
"Cliff Fletcher, thanks for taking the chance on a five-foot-six, 140-pound, big five-hole," said Vernon, drawing a laugh from Fletcher.
After nine seasons in Calgary, Vernon was traded to Detroit in 1994 for defenceman Steve Chiasson. With the Red Wings, Vernon won a second Stanley Cup as well as the Conn Smythe trophy in 1997.
He then had stops in San Jose and Florida before returning to Calgary in 2000-01, where he played two more years before retiring at age 39.
Vernon remains the Flames franchise leader in many goaltending categories including regular season victories (262), playoff victories (41) and career games (526).
To commemorate the evening, the Flames wore jerseys adorned with Vernon and No. 30 on the back for the pre-game warm-up, and giant red 30's were plastered everywhere around the rink boards.
In the crowd, the regular abundance of Kiprusoff jerseys were joined by a handful of raggedy looking old Flames jerseys with Vernon on the back.
The ceremony was emceed by the Flames' famous radio play-by-play man Peter Mahre. McDonald and Murray Edwards, representing the Flames ownership group, also spoke.
Among the many presentations, current Flames captain Jarome Iginla gave a bouquet of flowers to Vernon's wife Jane, and each of the former goalie's kids was given a current Flames jersey with their father's name and number on the back.