Modi was welcomed to the Ricoh Coliseum stage by Canadian Prime Minister Stephen Harper and his wife, Laureen.
Modi and the crowd sang along with India's anthem, and many kept singing during the Canadian anthem as well. Before beginning his speech, Modi received a lengthy standing ovation.
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"There's a new joy in India" Modi said, winning more cheers from the crowd.
Modi said his development goals include increasing the number of skilled workers in the country and growing the number of entrepreneurs. Indians, he said, should be creating jobs instead of seeking them.
He also talked about improving India's perception, saying he wants it to go from "scam India" to "skill India."
Modi spoke in a conversational tone from a stage that slowly rotated so the entire crowd could see his face at some point.
He also took time to praise Canada.
"I won't be able to forget the love that has been extended by Canada," Modi said, in translation.
The leader, who swept to power last May, thanks Canada for becoming a trade partner with India's Gujarat state, where he was chief minister at the time.
He also praised the crowd, which he described as "brothers and sisters" for their contributions to Canadian society.
Harper was also greeted with a huge roar from predominately Indo-Canadian audience when he announced Modi's agreement to issue visas to Canadian travellers upon their arrival in India.
"They told me that would be popular," Harper said, laughing.
Rock star treatment
Earlier, Modi was greeted by throngs of supporters at Pearson airport after his arrival from Ottawa. He's set to continue his visit to the city with a visit to the Air India Memorial tomorrow morning, before moving on to Vancouver.
Modi's enjoying rock-star-like treatment in Canada, where he enjoys wide popularity among the country's 1.2 million-strong Indo-Canadian population. Politicians and business leaders, meanwhile, are hoping his visit will create improved trade and other ties between India and Canada.
The thousands who wanted to see Modi speak waited around two hours to clear security. Inside, a range of performers sang and danced, while the crowd often chanted Modi's name.
For others, Modi's Toronto visit is a chance to protest.
Some people outside the event held signs criticizing the lack of religious freedom in India, the CBC's Lorenda Redekopp reported.
A group of around 100 Sikh protesters staged a demonstration nearby at the Princes' Gate, a short walk from where Modi is set to speak.
On Tuesday, a group called Sikhs for Justice called for Modi to be indicted while he's in Canada for his role in the 2002 inter-communal riots in the Indian state of Gujarat, where he was chief minister at the time. Some 1,000 people, mostly Muslims, died in the violence.
Modi has been cleared of wrongdoing by an investigation overseen by India's Supreme Court and confirmed by a Gujarat state court in 2012.
Jatinder Singh Grewal said there is still religious persecution in Modi's India.
"You see Muslims being forced to convert to Hinduism, you see Sikhs being denied their religious identity … this isn't acceptable to Canadians," he said.
It's unclear if Modi will touch on these issues when he speaks, but in the past he has talked about making India a place where all religions can flourish
At a similar major speech at New York's Madison Square Garden, Modi, who is known as a Hindu nationalist, told the crowd "I have a dream," echoing the words of Martin Luther King Jr.
Modi's trip is the first bilateral visit to Canada by an Indian prime minister since Indira Gandhi was hosted in 1973 by then prime minister Pierre Trudeau.
A small protest against <a href="https://twitter.com/hashtag/Modi?src=hash">#Modi</a> outside the hockey arena where he'll speak to a crowd of nearly 10,000 <a href="https://twitter.com/hashtag/cbcto?src=hash">#cbcto</a> <a href="http://t.co/AsHiJ6uWv8">pic.twitter.com/AsHiJ6uWv8</a>—@CBCLorenda
Security remains tight at <a href="https://twitter.com/hashtag/RicohColiseum?src=hash">#RicohColiseum</a> for the <a href="https://twitter.com/hashtag/ModiinCanada?src=hash">#ModiinCanada</a> event in <a href="https://twitter.com/hashtag/Toronto?src=hash">#Toronto</a> tonight. Line moving slowly. <a href="http://t.co/FM9GKT3SrF">pic.twitter.com/FM9GKT3SrF</a>—@CBCmatt
- An earlier version of this story said Modi's visit was the first to Canada by an Indian prime minister since 1973. In fact it's the first bilateral visit by an Indian prime minister since that time.Apr 15, 2015 10:34 AM ET