"The Lady of the Lake" made her maiden voyage on Lake Wakatipu on October 18, 1912.
Real Journeys offered a "locals' cruise" from Steamer Wharf down the Frankton Arm and back with entertainment by the Arrowtown Miners Band and complimentary birthday cake, pikelets and beverages to mark the occasion.
Queenstown grandmothers Anita Lewis and Gill Wikstrom said their children had grown up with Earnslaw, as their grandchildren were doing now, and it was a privilege to be on board for the birthday party.
Queenstown resident Dawn Stringer said it was her fourth trip on the ship.
"It's nice because it's old and you can see Queenstown from a different angle. I hope it starts going down to Kingston again."
TSS Earnslaw Walter Peak manager Andrew Husheer said the birthday cruise was a success.
Real Journeys was looking forward to hosting it again next year, as well as organising the ship's centenary in 2012, which would coincide with Queenstown's 150th anniversary.
"It's been a really good celebration with a great mixture of locals and a few tourists who really enjoyed the occasion and were pleased to be here for her 96th birthday."
