A special blue plaque, which is traditionally placed at significant historical sites all over Britain, was unveiled on the wall of the Angel Pub in Highgate in memory of Chapman, who died from cancer in 1989.
The honour, which references Chapman's role in the Life of Brian, was organised by friends and relatives after English Heritage officials were forced to cancel their plans for the plaque due to budget restraints.
Chapman is remembered on the accolade as "a very naughty boy" who "drank here often and copiously".
Palin says, "I think he'd be suitably impressed that we all came along. He would have stroked his sideburns a bit as he was known to do. I think he would have approved...
"I spent many happy times with him, most of which I forget. This was where he was and we used to come up here to see him. Highgate was his patch and he should be celebrated because he was a very good, brilliant, funny, nice, wise, kind man, who occasionally drank too much."