Most of those on board the Iranian Airbus were Iranians on their way to Mecca. The victims also included 66 children and 38 foreign nationals.
An official inquiry carried out by the US attributed the mistake to human error.
However, the Iranian government has always disputed the American version of events.
It took four years for the US administration to admit officially that the USS Vincennes was in Iranian waters when the skirmish took place with the Iranian gunboats.
Subsequent investigations have accused the US military of waging a covert war against Iran in support of Iraq.
The US government has never admitted responsibility or apologised for the tragedy.
Some believe the Lockerbie bombing, carried out six months later in December 1988, was masterminded by Iranians in revenge for the Airbus tragedy, although a Libyan man was convicted and jailed in 2001.
In February 1996 the US agreed to pay Iran $61.8 million in compensation for the 248 Iranians killed, plus the cost of the aircraft and legal expenses.
It had already paid a further $40 million to the other countries whose nationals were killed.
