Loleatta Holloway serving it to the children at The Gallery in New York in the mid 1970s; Jocelyn Brown screaming down the walls of The Paradise Garage in similar SoHO scenes a few years on; Sylvester bringing her inimitable sequined glamour to the Trocadero Transfer in San Francisco as the spectre of AIDS hovered menacingly over The Castro. Just some of the live shows that have gone down in gay folklore as wish you were there moments. Add to that list Grace Jones hula-hooping her way through 'Slave to the Rhythm' in high heels and bodice at Lovebox Sunday in 2010 and you start to understand why her return to headline Victoria Park this year was so eagerly anticipated. But it's what goes on in the little corners that marks Lovebox out from many of the other City park festivals have sprung up in London over the last few years (including a good handful at Victoria Park). Now in its 10th year, the festival is split into three distinct days, with "Out & Out Fierce" Sundays targeted at London's gay and gay friendly crowd.

It was after going to the festival in 2009 that curator/promoter James Baillie had the idea of a totally gay themed day. "I sold the concept/idea into the Mama group and they let me go away and develop the idea further," he recently told Dan Beaumont from Dalston Superstore, another East London gay institution that has a presence at this year's event. "I wanted Sunday to be a celebration of everything gay and so far removed to what London Gay Pride was offering."

And it's certainly true that for many of those making their way to Victoria Park in the sunshine today, Lovebox Sunday has taken on the mantle from Pride, which has become over-commercialised and a pale representation of London's varied gay scene. "That's the word on the street,' Bailie told Time Out last year. "There are more than half a million gay people living in the capital and Sunday is a big day for them to go out, but no one was really doing anything good." As host of the main stage and renowned drag artist Jonny Woo also explained. "I think [a gay presence at festivals] is part of a much bigger trend. It's definitely a culmination of the last five years of the alternative drag cabaret trend and how that scene has been embraced by fashion." Another event to have embraced this trend was Milk in the Park, the 2010 event which celebrated the life of Harvey Milk with performances by Candy Staton alongside club tents from the likes of Vauxhall's Deep Inside and Carpet Burn, and who could forget the tranny netball. Although this brilliant event in Vauxhall Park has since struggled to gain sponsorship, it's another sign of a growing demand amongst the gay community for a festival of their own, and how well Lovebox Sunday serves it.

In this age of increasing commercialisation and homogenisation, what people really want from a festival is an alternative to the mainstream, and for the past five years the incredible NYC Downlow has been doing just that at Glastonbury. The hedonistic chaos has now been transplanted to the fields of East London and it's where any trip to Lovebox should begin. Set up by five friends who were bored with the usual festival fodder and distinct lack of dirty glamour, they had the idea for "the world's first travelling homo disco". Themed on a post apocalyptic event in 70's New York where the only thing left standing is the grimy glamour of a disco Hotel inhabited by transvestites, it has been described by its founders as "music venue set in an art installation or film set". The first thing that grabs you as you approach the installation is the yellow taxi that has crashed into the top floor of the building. Get closer and the attention to detail is impressive with an old TV repair store and XXX porn shop completing the street scene, while a rotating drag act (including the brilliant Jonny Woo) entertain and insult the queue.

As with the legendary bank holidays at Vauxhall's Horse Meat Disco, whose DJs are warming things up nicely inside, those queues are already growing by early afternoon when we arrive. Once we purchase our obligatory stick on moustache for entrance and step inside, the atmosphere is already hot, with DJ Tim Sweeney from New York's brilliant 'Beats in Space' radio show slipping on Dennis Parker's Saint anthem 'Like An Eagle'. The trannies and drag artists inhabiting the walkway and the topless bears congregating in the middle of the floor certainly approve. Although it's hard to tear us away from the sweat and musk of this increasingly intense party, there is more to explore.

For the past three years, Dalston Superstore has helped re-energise the wrong end of the Kingsland Road. Although the über-hipster scene it is now part of is easy to ridicule, it continues to put on some great diverse nights. That is reflected in the sounds as we pass the stage throughout the day, veering from disco and early 90s New York house to R&B, but the atmosphere contrasts with the hugs and smiles at the Downlow and we only linger for a while. The club should be credited with diversifying, though, and this year they have branched out with a live stage, where everyone from Patrick Wolf to Azari & III played. One of the other better afternoon shows came from The Rapture whose 'Echoes' sounded as urgent and relevant as it did almost 10 years ago now. Other stages where we slugged overpriced Tuborg were the excellent Art Against Knives where DJs like Steve Kotey pumped it out from the inside of a van, and Florita Wah Wah where the raucous Hackney Colliery Band provided a nice brass led respite from some of the poppier fare being served up in the afternoon sun.

But as the day became evening attention switched to the Main Stage where a triumvirate of disco legends were gathering. We had already caught Chic at WOMAD a few years ago and while they had impressed, their high sheen seemed somewhat out of place. Proving that it's so much to do with context, when Nile Rodgers' guitar licks kick in and the vocal refrain of 'I Want Your Love' is returned by thousands of screams it's clear that Lovebox is a perfect setting for their white suited 70s revival.

Although at times she needed her backing singers to help her reach some of those high notes, the brilliant Chaka Khan worked her way through her hits, with 'Ain't Nobody' perhaps the nearest to how she must have sounded live back in the day. The fact that the conversations around us focused more on her tight denim catsuit was perhaps a sign that some of the crowd had one eye on the main event.

Anticipation builds as a black screen covers the stage for half an hour more than scheduled. But this is Grace Jones and her fans know who is the boss, and so wait patiently as the first drops of rain of the day fill the air. Suddenly the screen falls to reveal a towering silver gowned figure stood on a crane high above the stage - Sun Ra-like in her stature. As she descends slowly, her cape falls to reveal those incredible cheekbones and feline eyes offset by a metallic purple headdress. As she works her way across the stage opening into the noir soul of 'Private Life', the strength and eloquence of this 64-year-old's voice is matched by an immense presence that truly encapsulates that much overused word 'legend'.

Through a set that sees her sprawled out with wild delight while enticing 'My Jamaican Guy', sipping red wine through a straw ("how very French") for 'La Vie En Rose', and banging a large bass drum between her legs for the brilliant 'Feel Up', highlights include a great rock version of 'Love Is the Drug' with a laser showering drops of cosmic light around her head. By the time she slips on the hoola hoop for 'Slave To The Rhythm' she has the crowd in the palm of her hand - and you just know what she's going to do next. No encore needed, the day belonged to Grace. But it wouldn't have been half the party without this unique festival crowd who make Lovebox Sunday such a special London event.