Security is especially tight at the Kadhimiyah mosque, where the imam is said to be buried, and has been the site of previous attacks.
Brigadier General Qassim al-Moussawi, Iraq's military spokesman, said that 100,000 members of the Iraqi security forces, along with US reinforcements, had been deployed in Baghdad, while US-led forces will provide air support.
A vehicle ban also has been imposed in Kadhimiyah until the end of the festival on Tuesday, al-Moussawi said.
Security forces deployed for the event include a team of female guards to search women.
On August 31, 2005, at least 965 people died in a stampede at a Baghdad bridge near the area triggered by rumours that a suicide bomber was in their midst. The rumours had developed following a mortar attack on the mosque that killed seven people.
In other violence on Sunday, a bomb wounded a member of an Iraqi provincial council and killed two of his bodyguards in the city of Fallujah in what police said was an assassination attempt.
Zeki al-Mohammedi, a member of the al-Anbar provincial council and head of the Fallujah branch of the Iraqi Islamic Party, escaped with minor wounds when the bomb exploded inside the garage of his home.