The Oranje lost the final of the 2010 World Cup 1-0 to Spain at the Soccer City Stadium in Johannesburg on Sunday night, thanks to an extra-time goal from Andres Iniesta. It was third time unlucky for the Oranje, who reached the finals in the 1974 and 1978 World Cups but lost on both occasions.
Fans cheered as the players went on an open-top boat tour of Amsterdam's canals. Dutch football fans lined the waterways and celebrated as if they had won the World Cup.
The celebrations were originally scheduled to happen only if the Netherlands came back victorious from South Africa, but Amsterdam officials released a statement in which they said, "Even in second place, the Dutch team are champions in the eyes of their country."
The Dutch team had earlier met Prime Minister Jan Peter Balkenende and Queen Beatrix. Coach Bert van Marwijk and captain Giovanni van Bronckhorst, who featured in his final international match for the Netherlands on Sunday, were knighted by the Prime Minister at his official Catshuis residence.
Balkenende was sporting an orange tie and served the squad coffee and cakes with orange icing in his garden, which was decorated with orange balloons.
"The Netherlands is proud of Oranje," he said.
The players then met Queen Beatrix at her Noordeinde Palace in The Hague, before being taken by helicopter to Amsterdam. An estimated half a million people came to cheer their heroes in the city.