Hughes, 25, died after being hit by a ball during a match in Sydney. His death stunned Australia and prompted the rescheduling of the upcoming Test series against India.
During the 80-minute service, Clarke said: "Phillip's spirit, which is now part of our game forever, will act as a custodian of the sport we all love."
He added: "We must listen to it. We must cherish it. We must learn from it. We must dig in and get through to tea. And we must play on.
"So rest in peace my little brother. I will see you out in the middle."
Family, friends, dignitaries and team-mates turned out for Wednesday's funeral in Macksville, where Hughes grew up.
The service was broadcast live on national television and on big screens in Australia's major cities. It was also shown at the Sydney Cricket Ground, where Hughes suffered the fatal injury during a state match last Tuesday.
Around 1,000 people packed into Macksville High School, which Hughes attended, for the funeral as thousands more watched on screens outside.
Joining the parents of Hughes, Greg and Virginia, and his siblings, Jason and Megan, were Clarke and Sean Abbott, the bowler whose delivery caused the fatal injury to Hughes.
Former Australia internationals Shane Warne, Glenn McGrath, Ricky Ponting, Adam Gilchrist, Steve Waugh and Justin Langer were also among the mourners.
They were joined by Australian Prime Minister Tony Abbott and cricketing legends from around the world, including former New Zealand all-rounder Sir Richard Hadlee and West Indies batsman Brian Lara.
Hughes, who would have been 26 on 30 November, was in line for a recall to the Australia Test side for the forthcoming series against India.
The number 63 - the runs he had scored when he was fatally injured - has become inextricably linked with his death, as has the social media campaign that urged people to remember the batsman by placing cricket bats outside homes, workplaces and at sports grounds.
Macksville, with a population of just 2,500, lies on Australia's east coast, in the state of New South Wales.
Among those to send their condolence messages was West Indies great Sir Viv Richards, who tweeted: "My heart goes out to the family, friends & the people of Macksville honouring their favourite son Phillip today. Viv."
Following the ceremony, Prime Minister Abbott wrote on Twitter: "A sad, poignant, beautiful service to celebrate the life of Phillip Hughes today in Macksville," adding the hashtag 'RIP Phillip Hughes'.
Former Australia batsman Damien Martyn tweeted: "Such a beautiful service. Forever remembered and never forgotten..."(KH)
