The plaque was unveiled at 50 St Catherine's Drive in Douglas by Robin Gibb's son, Robin-John.
Robin Gibb died of kidney failure in May, following a long battle with cancer.
The ceremony was the culmination of a five-year campaign, spearheaded by the late Bee Gees singer Robin Gibb.
Robin Gibb cancelled a series of shows in Brazil in April 2011, after again suffering from abdominal pains.
Despite the band's success Robin Gibb continued to pursue a solo career and also wrote songs for other artists.
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Robin Gibb died last year following a lengthy battle with cancer, whilst his twin brother Maurice died in Miami in 2003.
The group met its goal thanks to private donations, spurred on by the enthusiastic support of the late Bee Gee Robin Gibb.
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Robin Gibb's twin brother, Maurice, died in 2003 of a twisted bowel.
To mark the 30th anniversary of Saturday Night Fever topping the charts in the UK, Robin Gibb will also perform alongside Sam Sparro and Sharleen Spiteri with the BBC Concert Orchestra in London's Roundhouse on October 25.
However, the European Composer and Songwriter Alliance (ECSA) , which counts Bee Gee Robin Gibb, Pedro Almodovar and Spanish singer Julio Iglesias among its supporters, is lobbying to prevent any change saying that the system operates adequately as it is.
Gibb's wife Dwina and children Robin-John, Spencer, and Melissa have been at his bedside every day, the doctor said.
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