The state funeral began at 0600 GMT (1130 IST), with a two-hour public ceremony being attended by over 4,500 invited guests, including former US president Bill Clinton, the Prince of Wales, the Iranian vice-president and presidents of several African nations.
Archbishop Desmond Tutu - a long-time friend of Mandela - would also attend the funeral. The ceremony began with the coffin being taken from Madiba's house to a specially erected giant white marquee.
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Thembu community, of which Mandela is a member, will conduct a traditional Xhosa ceremony - including songs and poems about his life and his achievements.
An ox will be slaughtered, signifying a tribal ritual. A family elder will stay near the coffin, which has been draped with a lion's skin.
During the ceremony, Mandela will be referred to as Dalibhunga - the name given to him at the age of 16.
Mourners were seen wearing traditional Xhosa regalia, with blue and white beaded head gear and necklaces.
The burial will be a private affair that would be attended by around 450 people, including Mandela's widow Graca Machel and ex-wife Winnie Madikizela-Mandela.
Mandela's casket was brought yesterday by an air force plane at Mthatha airport. The casket, accompanied by senior clan and family members, was greeted at the airport by a military guard of honour.
To solemn music, the coffin draped in a South African flag was moved by soldiers and placed in a hearse to begin the road journey. The cortege drove through the streets of the town before reaching Qunu, about 31 km away.
People who had travelled for hours thronged the road leading to Qunu, singing and dancing as Mandela T-shirts were handed out. Local people were invited to form a human chain to pay their respects along the route to Qunu.
Mandela died on December 5 at the age of 95 after a protracted illness.