The palace press office said 15,000 people paid their respects to the king, but reporters who watched visitors enter the palace estimated that there were no more than 2,000.
It was in sharp contrast to the tens of thousands who used to offer the king birthday greetings before he sacked the government and assumed total power in 2005.
Nepalese government officials said they would also avoid the event after dozens of supporters and opponents of the king clashed on Saturday.
Nine people, including two police officers, were injured in Durbar Square, south of the palace.
The monarchy faces abolition after Maoist rebels ended their decade-long "people's war" and joined the government this year.
The new government stripped Gyanendra of almost all his powers including control over the army and taxed his property and income.
Student and youth groups affiliated with the government held protests on Saturday.
"We may call for more protests on Sunday," said Ganesh Man Pun, the chairman of the Maoist-linked Young Communist League.