The Leader of SKDC, Cllr Kelham Cooke, and elected members joined civic dignitaries, cadets and military representatives, including the Malaya & Borneo Veterans Association, for the event on Monday.
SKDC Chairman Cllr Helen Crawford said: "The Armed Forces Flag Raising ceremony is an opportunity for us to come together to recognise and celebrate the wonderful service provided by our regular and reservist soldiers, sailors, airmen and marines, past and present, and the families that have supported them in turn.
"It is so important that we continue to recognise and show appreciation for the Armed Forces, and I would like to thank you all for joining us today for this flag raising ceremony."
Major Guy Page, Regimental Second in Command from the Prince William of Gloucester Barracks, said: "Armed Forces Personnel are deployed around the world, often in dangerous and difficult conditions, helping other nations' humanitarian and peacekeeping efforts as well as protecting the United Kingdom. The public's support for them and their families is vital.
"Over recent years Army Reserves have distinguished themselves with an exceptional response to the COVID-19 challenge. With the support of their employers, individuals volunteered immediately to mobilise into the regular service to support UK Defence and help the NHS to save lives. We at Prince William of Gloucester Barracks have been proud of our contribution towards that effort.
"Grantham has strong links to the Armed Forces and those close ties continue with young people joining the forces to serve our country with honour and distinction, returning to civilian life as valued members of their community, greatly enriched by their experiences."
Army and RAF cadets from King's School attended, with bugler James Diamond playing the Last Post and Reveille. Father Stuart Cradduck from St Wulfram's Church offered a prayer of thanksgiving.
The flag will remain flying until the end of National Armed Forces Day on 25 June.