Union ministers of state Jitendra Singh and Jayant Sinha, J&K Deputy Chief Minister Nirmal Singh and Assembly Speaker Kavinder Gupta were also present at the event.
"Today, a new beginning has been made by upgrading the terminal building with modern facilities. We will find alternative land to build a better airport", Mehbooba said while addressing a gathering in Jammu.
She said that the new terminal will go a long way in fulfilling her father and former chief minister Mufti Mohammad Sayeed's dream of developing Jammu as an independent tourist destination.
"Jammu has many tourist places and it has the potential to emerge as an independent tourist destination and the state government is working towards it," the chief minister said.
She also praised Prime Minister Narendra Modi for "the development journey" and said that "the country is moving like an elephant on the path of progress".
Union minister Raju hailed those who worked overtime to complete the project. "India's aviation industry is the fastest growing industry in the world and we hope it will become the biggest in the world", he said.
The Jammu Airport is set to offer a world-class experience to passengers with an expanded and modernised terminal. The departure hall at the ground floor is now completed and open to passenger traffic from tomorrow", said DK Gautam, Airports Authority of India (AAI) director.
Three aerobridges are expected to be delivered at the airport by September this year and an equal number will be commissioned by mid-November, Mr Gautam said.
A canopy to protect the passengers from extreme weather conditions from the ticket counters to the exit gate is almost complete. It will enhance the convenience of travellers in the airport, he added.