Mugabe, a former school teacher and leader of the liberation struggle, was forced last year into a power-sharing government with arch-rival Morgan Tsvangirai, now prime minister, after a political crisis sparked by a disputed general election in 2008.
"I come to celebrate the independence my last heroes fought for," Brian Kasunzumuma, a 27-year-old vendor, told the AFP news agency.
"I come here every year to celebrate independence as a Zimbabwean."
Mugabe, now 86, is blamed for the ruin of the country in recent years, as it went from being an agricultural powerhouse and educational beacon, to having a stagnant economy and continuing political crisis.
"It should be a landmark anniversary, but unfortunately for many people it is a time to count lost opportunities, and wasted lives," Lovemore Madhuku, a political commentator and head of pressure group National Constitutional Assembly, said.
Analysts say some structures of the Mugabe's Zanu-PF party have been fractured by the near loss of power in 2008 but the police, army and state security brass still largely backs the ageing leader.
While the fragile coalition has stabilised the economy and re-opened schools and hospitals, it is too broke to rebuild collapsed public infrastructure and provide clean water.
A drive to write a new constitution leading to new elections is running eight months behind and Western donors have withheld aid over the reforms and implementation of a power-sharing pact.
Zimbabwe says it needs $10bn to revive the economy.
Some analysts say that Zimbabweans are frustrated with the slow pace of economic recovery and political progress since the unity government assumed office 14 months ago.
"Instead of celebrating freedom, a lot of people are preoccupied and are rightly worried about their lives and the future," Madhuku said.
"Instead of celebrating freedom, a lot of people are preoccupied and are rightly worried about their lives and the future"
Lovemore Madhuku, political commentator
"There is very little happening around us to give anyone any sense of comfort."
Mugabe is pressing on with plans to turn over control of foreign firms to locals under a black empowerment drive, despite claims that the move will damage the economy and discourage foreign investment.
While he argues that the seizure of white-owned farms for landless blacks was meant to correct colonial injustices and economically empower native Zimbabweans, it has left a former "bread basket of Africa" surviving on food handouts.
Millions of Zimbabweans have fallen into poverty over the years, and millions more have crossed into neighbouring countries to seek jobs and food.
"Unless the economy is fixed, and fixed quickly, there is little to celebrate. Our economy is in a very bad shape," Eric Bloch, a Zimbabwean economist, said.