Two other unnamed passengers will receive the honor at a later date.
Americans Spencer Stone, Alek Skarlatos, Anthony Sadler, Briton Chris Norman and two other passengers overpowered a suspected radical Islamist on a high-speed train bound for Paris on August 21.
French authorities are questioning the suspect, Moroccan national Ayoub El-Khazzani, 25.
President Francois Hollande pinned the medals on the chests of the four passengers at the ceremony in Paris on August 24.
Before the awards, the president said: “We are here to honor four men who, thanks to their bravery, managed to save lives. They showed what could be done in terrible circumstances.
“In the name of France, I would like to thank you. The whole world admires your bravery. It should be an example to all of us and inspire us. You put your lives at risk in order to defend freedom.”
Francois Hollande added: “A terrorist decided to commit an attack. He had enough weapons and ammunition to carry out real carnage, and that’s what he would have done if you hadn’t tackled him at a risk to your own lives.
“You gave us a lesson in courage, in will, and thus in hope.”
Belgian PM Charles Michel and the US Ambassador to France, Jane Hartley, attended the ceremony, along with the head of the French rail firm, SNCF.
The Legion d’honneur was founded by Napoleon Bonaparte in 1802. The award is divided into five categories and the passengers are expected to receive the chevalier, the most commonly awarded.
A French-American passenger who was wounded in the attack, and a French citizen who first encountered the gunman and tried to overpower him, will receive the honor later.
Francois Hollande named the French-American as 51-year-old Mark Moogalian, who is still in hospital. The other man wishes to remain anonymous.
The Americans spoke on August 23 about the incident.
Spencer Stone, an off-duty US airman, said he had just woken from a deep sleep when he saw the gunman and moved to restrain him.
He was the first of the three to reach the gunman. He was cut in the neck and on the eyebrow, and his thumb was almost sliced off.
Spencer Stone also tended to Mark Moogalian, who had been shot in the neck.
Alek Skarlatos, a member of the US National Guard, said his initial reaction was “mostly just gut instinct”, and that military training had only played a role in providing medical help and making sure there were no accomplices.
Anthony Sadler said: “The gunman would have been successful if my friend Spencer had not gotten up. I want that lesson to be learned, in times of terror like that, to please do something. Don’t just stand by and watch.”
British Chris Norman, an IT expert, said he helped the Americans subdue the gunman because he thought he was “probably going to die anyway”.
Under French law, authorities have until Tuesday evening to question the suspect.
Sophie David, a lawyer assigned to the case for Ayoub El-Khazzani, said the Moroccan was “dumbfounded that his act is being linked to terrorism” and that he had said he found the weapons in a Belgian park and wanted to rob passengers.
Ayoub El-Khazzani’s father, Mohamed el-Khazzani, told the Daily Telegraph in Algeciras, Spain, that his son was a “good boy” interested in “football and fishing”.
The suspect was flagged up to French authorities by Spanish counterparts in February 2014.
He is reported to have lived in France, Spain, and Belgium and to have travelled to Syria.
Security aboard the high-speed Thalys service on which the incident took place is being stepped up. The trains link major cities in the Netherlands and Belgium to Paris.
Patrols and security checks will also be boosted at international train stations.
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