The parade followed a weekend in which President Sarkozy launched the Union for the Mediterranean, a new international body with 43 member nations aimed at increasing co-operation between the EU and African and Middle Eastern countries bordering the Mediterranean.
It is meant to tackle regional issues such as immigration and pollution, but will also seek to help end unrest in the Middle East.
Many of the leaders who attended that summit on Sunday stayed on for the Bastille Day celebrations.
They included Palestinian President Mahmoud Abbas, German Chancellor Angela Merkel and Egypt's President Hosni Mubarak.
But Mr Assad's presence angered a French veterans' group, which accuses Syria of being behind a 1983 bomb attack on a Beirut building that killed 58 French soldiers.
"We feel uneasy" about French soldiers filing past the Syrian leader, said Jean-Luc Hemar, head of the Association of Veterans from Camp Idron in central France.
Mr Sarkozy is one of those politicians who is full of surprises because he is always campaigning
The bombing "will cast a shadow over the 14th of July", he said.
Opposition Socialist leader Francois Hollande said the national day - which recollects the storming of the Bastille prison in 1789 at the start of the French Revolution - was being "tainted by controversy".
However, the government said its critics had made "a historical mistake", and that Hezbollah guerrillas, and not Syria, were behind the 1983 Drakkar bombing.
Mr Sarkozy, who waved to the crowd from an open-top military vehicle, made a point of praising the military, which he is said to have upset by seeking to cut 50,000 defence jobs, and by sharply criticising over an accidental shooting at a military open day last month.
"I am very proud of this parade, very proud of the French army. The army put on a remarkable display," the president said.
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