Raitt, who shared a Grammy Award with Hooker for their 1990 duet I'm In the Mood, told guests the singer did not succumb to "the blues disease".
Hooker's coffin was placed next to flower arrangements of a guitar and an empty chair as mourners remembered one of the most influential blues musicians of the 20th Century.
Hooker is said to have told his daughter Zakiya Hooker-Bell that he did not want any "weeping, crying, falling around, gnashing of teeth" when he died.
"I want people to be joyous, because I'm going home. I'm tired. I've made a journey."
Hooker died in his sleep at his home in Los Altos, near San Francisco, on 21 June.
He was best-known for songs including Boogie Chillen, One Bourbon, One Scotch and One Beer, and Boom Boom, which influenced generations of artists.
Son Robert Hooker sang a version of gospel song I Still Have Joy and a led attendees in a call-and-response chant of his father's signature phrase, Hey, hey.
Raitt, who shared a Grammy Award with Hooker for their 1990 duet I'm In the Mood, told guests the singer did not succumb to "the blues disease".
"He had a God-given ability to stay open-hearted and wise," she said.
Raitt remembered having her mind blown by Hooker's contributions to the seminal Blues at Newport compilation as a 14-year-old in 1963.
"I had never heard anything coming out of any man that was as scary and evocative and as intoxicating. And I feel the same way about him today."
Hooker's daughter Francis McBee said it was typical of her father to die quietly at night.
"Instead of dying during the day, you died during the night so you could make a clean get-away," she said.
"Instead of leaving by the front door, you left by the back door and slipped quietly into history."
Harmonica player Charlie Musselwhite and blues veteran Eddie Kirkland were among others present.
Kirkland, 72, recalled his early days on the road with Hooker and said: "We've got to carry on as long as we can, because there aren't many of us left."
"I want all of you who sing the blues - black or white - to keep it going."
Hooker was born in a shack in Mississippi in 1917, and had his first success with Boogie Chillen in 1948.
He performed regularly to the end, receiving an ecstatic ovation in Santa Rosa, California the weekend before his death.