Olajuwon, 45, nicknamed "The Dream," retired after the 2001-02 season as the NBA's all-time shot blocker (3,830). The 12-time All-Star was the league MVP in 1994 and led the Rockets to their only two championships, in '94 and '95.
The 12-foot high, rectangular sculpture stands in front of the main entrance to the Toyota Center. It shows Olajuwon's No. 34 jersey with a basketball behind it and a paragraph below listing his NBA accomplishments.
"I'm sincerely grateful for this honor," said Olajuwon, who was selected to the Hall of Fame earlier this week. "This is the highest honor any player can receive in any city."
Olajuwon was joined on a makeshift outdoor stage by Rockets owner Les Alexander, former general manager Carroll Dawson and Clyde Drexler, his former teammate at the University of Houston and with the Rockets in the mid-1990s. Drexler was inducted into the Hall of Fame in 2004.
"We have traveled a long journey together, from college all the way to the Hall of Fame," Olajuwon said to Drexler. "I would like to thank the entire Rockets organization for their support over the years. I had a great time here and I cannot think of a better place to be."
When he first arrived at the arena, Olajuwon put on a pair of red and white, size-18 sneakers and stepped into a block of wet cement. He then kneeled to make handprints in another wet block. The blocks were to be placed near the sculpture.
"Are you coming back?" O'Neal said.
"No, no," Olajuwon said with a smile.
Suns star Grant Hill also shook Olajuwon's hand before jogging out to the court to warm up for the game.
Olajuwon was drafted No. 1 overall by the Rockets in 1984. In 17 seasons in Houston, Olajuwon averaged 22.5 points, 11 rebounds and 3.18 blocks.
"This is a great moment in Rockets history," Alexander said. "There has been no greater player in Houston sports history than Dream. He's a great guy also. I wish you all knew him as well as I did."
The Rockets traded Olajuwon to Toronto in August 2001 and he retired after one season with the Raptors. The Rockets retired Olajuwon's No. 34 in November 2002.
Olajuwon is the NBA's seventh all-time scorer (26,946 points) and ranks 11th in rebounds (13,748). He's one of 13 players to surpass 20,000 points and 10,000 rebounds.