One of South America's most prolific and internationally acclaimed authors, Neruda died shortly after Augusto Pinochet's 1973 military coup.
His work was suppressed during the 17-year dictatorship following his death, but even members of the former military turned up at the festivities in honour of the communist poet.
This year's celebrations are the first official tribute to the artist and diplomat organised by the left-leaning government.
In the Pacific port city of Valparaiso, some 150 people gathered in a street carnival outside Neruda's former home to write poetry on a huge sheet of paper rolled out on the street.
Organisers aim to piece together 2km of poetry, a world record.
The same military that ransacked Neruda's home after the coup was now helping unfurl rolls of paper so students from the Navy Academy could pay homage to him with their own creations.
"Chile has evolved and now we all pay homage to Neruda, even those who were never interested in him before such as the armed forces," said event organiser Rodrigo Bustos.
Regardless of their interest in poetry or political leanings, Chileans have been inundated for several days by items on Neruda in the media, on the subway and on the streets.
Top restaurants and an airline have prepared special menus based on his Elementary Odes, including odes to the onion and conger chowder.
Neruda's writing was suppressed
following Pinochet's (L) coup
Dozens of museums and cultural centres have set up special multimedia exhibits.
The ceremonies will culminate on Monday in a Poet's Train from Santiago to Neruda's birthplace, Parral, for a government celebration led by President Ricardo Lagos.
Neruda's diplomatic posting to Spain and the civil war there deepened his leftism.
After returning to Chile, he was elected senator but was forced into exile in 1949 when the government began persecuting communists. His exile ended in 1952.
Neruda was dying at his seaside home at Isla Negra when he heard of the coup that ousted Allende, followed by an anti-communist witch hunt. He died in a hospital 12 days later.
"Some say he really died of a broken heart," one tour guide said, showing visitors to his bedroom overlooking the Pacific Ocean.