Vice President Mohammad Qasim Fahim, who died on Sunday at 57, was an ethnic Tajik and a leading commander in the Northern Alliance, which battled the Taliban for years and helped the US in ousting the Islamic militant movement from power in 2001.
His death came a month before presidential elections to choose a successor to Karzai, who is barred from seeking a third term.
At a funeral service earlier in the presidential palace, Karzai lauded him for always promoting national interest.
The flag-covered coffin was then taken to a cemetery in Kabul, where thousands of people thronged the ambulance as it carried the body to the gravesite.
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Fahim was an ethnic Tajik who was the top deputy of Ahmad Shah Massoud, the charismatic Northern Alliance commander who was killed in an al-Qaida suicide bombing two days before the September 11, 2001, attacks.
He was widely accused of marginalising Pashtuns in the years after the Taliban were ousted, but later reconciled with Karzai and was widely considered somebody who could mediate between factions.