General Razeq Abd Ali al-Tayi, the Karbala police chief, said on Thursday that the ceremony had started at sunrise with thousands of pilgrims participating.
"We expect at least a million pilgrims to be present by noon today in Karbala," he said.
Ashura is the Shia's holiest period in the Islamic calendar. Nearly a million Shia from Iraq, Iran, Pakistan and other countries were expected to gather in Karbala, where Hussein, Prophet Muhammad's grandson, is buried.
Hussein is revered by Shia and Sunni Muslims.
Hussein was killed along with about 70 followers by an army of Umayyads, their rivals for leadership of the Muslim state, in 680 CE. Shia wanted Hussein to become the Caliph because they believed that the caliphate of the Islamic state must remain with the descendants of Prophet Muhammad.
Large groups of men with shaven heads, were seen marching towards the mausoleum of Hussein, flagellating their heads with knives and swords as part of the mourning ceremonies.
The rituals of self-flagellation, meant to evoke the suffering of Hussein in his final hours, coincide with the 10th day of Muharram in the Islamic lunar calendar. Muslims fast to mark the 10th of Muharram.
Men aged 15 to 50 were to participate in the ritual, which was to last until noon prayers and to be followed by organised religious processions.
"We expect at least a million pilgrims to be present by noon today in Karbala"
General Razeq Abd Ali al-Tayi, Karbala police chief
Dozens of mobile clinics were parked on street corners and close to the mausoleum to treat the bleeding men who, after a quick shower, were nursing their wounds.
The scene was repeated in other locations across the country, including in Baghdad's northern Kazimiyah suburb.
Many Iraqis cooked throughout the night - pilgrims attending the ceremonies are given meals of rice and thick soup laden with meat and chick peas.
Under Saddam Hussein, Shia were restricted from performing Ashura-related rituals, such as processions of men beating themselves with their hands, chains and the flat edges of swords in shows of grief.
But they resumed the practice after Saddam was deposed.