Five young men armed with guns and knives stormed the cafe on July 1, taking dozens hostage and killing 22 people. Most of the victims were foreigners, and many were brutally hacked to death.
A year later the bakery, which has reopened in a new location, throngs with customers hungry for its famous breads, cookies and pastries.
"It's great to have this place back. Reopening the cafe was a great act of courage," said Laura Jenkins, a US citizen who has lived in Bangladesh for five years, as she picked at a freshly baked croissant.
Cafe owner Sadat Mehdi said his decision to reopen had paid off, with loyal clients -- a mix of expatriates and well-heeled Bangladeshis living mostly in the diplomatic zone -- returning in droves.
"Their responses are the biggest encouragement for us," he told AFP on a recent visit.
Many of those caught up in the siege -- one of the worst Islamist attacks in Bangladesh's history -- were foreigners working in the country's $30 billion garment industry, a mainstay of the country's economy.
Government crackdown
The Islamic State group claimed responsibility for the attack, but Bangladesh insists it was the work of a local extremist group blamed for a series of earlier killings.
It followed a series of gruesome murders targeting foreigners and religious minorities in Bangladesh and caused many to flee to Bangkok.
As fears grew over the impact on the lucrative sector, government forces launched an unprecedented crackdown on Islamist extremists.
Over the past year they have killed nearly 70 suspected extremists, including a Bangladeshi-origin Canadian alleged to have been the mastermind of the attack, and arrested many more.
Home Minister Asaduzzaman Khan told AFP the Bangladeshi people had taken a "firm stance against militancy".
"They (militants) don’t have much strength left. Gradually we have managed to finish all of it," he said.
But not everyone agrees.
Critics accuse Prime Minister Sheikh Hasina's secular government of using the attacks to demonise her domestic opponents.
"Any sustainable counter-terrorism effort requires democratic responses, which is essentially a cross-party participation in the process," said Shahab Enam Khan, an expert on security and terrorism at Bangladesh's Jahangirnagar University.
"Otherwise the extremists' narrative will always cash in on the long-running political feuds existing in the country."
Armed guards
Most of the foreigners who left in the wake of the attack have now returned, reassured by an improvement in the security situation and a marked increase in the presence of government forces on the streets.
Many upscale restaurants and expat clubs have armed guards and sandbag barriers at their entrances to deter attacks.
Expatriates told AFP the measures had brought a degree of comfort -- at a cost.
"Not the best scene to watch a man with automatic rifle behind a bunker while sipping on your morning tea," said Briton Andy Froud.
"But at least I know he's just trying to ensure my safety."
The heavily armed police patrolling outside the Holey cafe provide a constant reminder of the night of July 1.
Survivor Shahriar Ahmed, the cafe's sales manager, says he is still haunted by the memories of that night.
"It comes back as nightmares very often. But I want to forget it," he said.
"We help each other to overcome those traumatic memories. We are trying our best to live normal lives."
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