King Jigme Khesar Namgyel Wangchuck along with his wife turned up unexpectedly at the Paro Airport as a special gesture to receive Mukherjee.
Mukherjee then travelled by road to Thimphu (about 50 km) as hundreds of school children were lined up along the way, holding Indian and Bhutanese flag.
Mukherjee was given a ceremonial guard of honour at Tashichhoedzong, a Buddhist monastery and fortress which has traditionally been the seat of the head of Bhutan's civil government located on the northern edge of Thimphu.
It is believed that this traditional custom brings good fortune for the country and goodwill with its neighbours.
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President Mukherjee and King Jigme later held bilateral talks. After the talks, photographs of the two were clicked during which the monarch's father Jigme Singye Wangchuck was also present.
During the visit, Mukherjee will also hold meetings with Prime Minister Tshering Tobgay besides other leaders to take bilateral ties to a new level.
The President is accompanied by a high-level delegation comprising Minister of State for Railways Manoj Sinha, Members of Parliament Mukhtar Abbas Naqvi, Anil Shirole, Mahendra Nath Pandey (all BJP) and Gaurav Gogoi (Congress), besides officials and representatives of a few educational and academic institutions..
Sources said as India is keen to revive the ancient Nalanda University, an agreement will be signed for seeking cooperation from Bhutan in this regard.
Mukherjee's visit to Bhutan comes nearly five months after Prime Minister Narendra Modi's trip to the country. It was Modi's first foreign visit as Prime Minister.
India shares a unique and special relationship with Bhutan nurtured by successive Kings of Bhutan and Indian leaders.