The Gay and Lesbian Pride Parade began on 16th Street NW at Meridian Hill Park yesterday with marching bands blaring, car horns tooting, and marchers lined up in formation behind their groups' banners. Turning down Columbia Road, some paraders tentatively began placing a hand on the hip of a friend. As the parade wheeled around Dupont Circle and down P Street, participants shed their shirts and held hands.

And as the parade entered P Street Beach and the grounds of the adjacent Francis Junior High School, inhibitions were fully flung away as men put their arms around men, women danced with women, and more than 20,000 people gathered for the city's annual gay pride festival. The P Street Festival group, organizers of yesterday's event, said this year's gay festival was the biggest in its 14-year history.

"All year long you wish you could reach out and touch someone you love," said Jerry Buskirk, a computer programmer who lives on Massachusetts Avenue NW. "This is the day that gives us license to do that. It's a vast contrast with the daily lives of so many of the people here," who don't feel free to reveal their homosexuality. "Today is like Christmas and your birthday together," he said.

The parade, along a two-mile Northwest route, lasted about an hour and ended with a six-hour celebration of life style at the P Street Beach. Several speakers praised the notion of such a day, gay bands played new wave music, and there were performances by gay dancers.

"You're a very potent force in this community," D.C. Mayor Marion Barry told the group in a speech. "One thing politicians understand is votes and money, and you've got both." Barry recalled that when he took over as mayor, there were two or three gays in leadership positions in city government or on city boards. Now there are almost 60, Barry said.

"You've got to come out of the closet all the time, all the time, all the time, both socially and politically," Barry said, to cheering and shouts of "amen." "Let me hear it for Gay and Lesbian Pride Day, and let President Reagan hear it."

City Council Chairman David A. Clarke, and council members John Wilson and Betty Ann Kane also addressed the group and expressed solidarity with the gay community.

But even with all the good feelings, there was a somberness beneath the surface of this year's event, participants said in interviews during the celebration. The reason is Acquired Immune Deficiency Syndrome (AIDS), the disease that strikes gay men and is often fatal. Of 1,450 people who have contracted AIDS in the United States, 558 have died, according to the federal Centers for Disease Control in Atlanta. There have been 12 cases reported in the Washington area, but doctors say no one knows how many undiagnosed cases exist.

"It's a sobering thing, and it's brought a lot of changes in terms of life styles," said a man who gave his name as Charles, an investment banker who lives near Dupont Circle. "People are more selective. There's more dating, rather than just jumping into bed with someone."

"But what absolutely bowls me over," Charles said, "is the insulting attitude of the Reagan administration."

Charles was one of numerous participants, and speakers as well, at yesterday's festival who criticized Health and Human Services Secretary Margaret M. Heckler for comments she made in Denver last week. Heckler said that AIDS has caused "unwarranted panic," since it strikes only a small group of citizens and is unlikely to affect "the overwhelming majority of Americans."

Last night, about 200 people participated in a candlelight march from Dupont Circle to the White House, U.S. Park Police said. Organizers said the march and vigil at the White House were to demonstrate gays' concern about AIDS.

If there was a general statement made yesterday, it was that gay people want to be more visible in Washington.

"We're not ashamed about our sexual orientation," said Judge Coggin, a federal employe who lives in Rockville, walking with friends in the parade on Columbia Road. "We're just the same as they are."

At that moment, a group of men on the steps of an apartment building yelled a string of derisive remarks about the marchers. "My Lord, look at them," said one of the men on the steps, pointing and laughing. The rally at P Street Beach provided a haven from this sort of hostility.

"It's a fantastic day," said Johnny, an unemployed man from Northeast, as he danced with a friend to a raucous Michael Jackson tune. He said he's danced with men at gay clubs before, but never in daylight. "I have my people around me today."