Intensified security appeared to be holding sectarian violence at bay in the city on Monday, but five pilgrims making their way to Kerbala were wounded earlier in a drive-by shooting in the town of Iskandariyah, 50km south of Baghdad, police said.
Nearly 10,000 troops and police guarded hundreds of thousands of Shia pilgrims that suicide bombers had targeted in the past.
Kerbala police chief Razzak al-Ta'ee told Reuters: "We expect everything during this occasion, maybe bombings. But we have set plans and intensified efforts to defuse any situation."
Local officials said they expected up to 2 million people to attend the ceremonies that would climax on Monday evening in Kerbala.
Mohamed al-Khazali, a 58-year-old Shia pilgrim who traveled to Karbala from nearby Najaf, said: "We are not deterred by the attacks by terrorists and extremists, who want to prevent us from doing our rituals."
"We are not deterred by the attacks by terrorists and extremists, who want to prevent us from doing our rituals"
Many Shia Muslims carried flags and performed rituals of self-flagellation with chains to display grief over Hussein's death.
Even some Sunni Muslims were among those gathered.
"Imam Hussein is a symbol for all Muslims, not just for Shiites," said Amer al-Nuami, 55.
In the recent past, the Arbain commemoration has been a target for insurgents.
In 2004, coordinated blasts by suicide bombers, mortars and planted explosives hit Shia shrines in Kerbala and in Baghdad, killing 181 people.