15 June 2013 Last updated at 17:21 BST
Tafwyl is a free family festival in the grounds of Cardiff Castle, featuring music, sport and craft activities, as well as cookery and literature. Around 10,000 people were attending.
Rhys, who is also due to start filming a BBC Wales drama from Monday, said holding the festival in the city helped to break down potential barriers to the Welsh language.
Education Minister Leighton Andrews also said it had an important role to play in showing off the language and its growth in the city.
Actor Matthew Rhys, the star of Cold War drama series The Americans, returned to his home city Cardiff to open a Welsh language festival.