Churches, private and government buildings, markets and homes have been decked up and illuminated in Kohima, Dimapur and Mokokchung towns.
Shoppers have been thronging markets for the last few days, while students pursuing academic careers in other states have returned home for the festivities.
The government has announced holidays since Saturday and offices will be reopen on January 2.
Nagaland Governor Nikhil Kumar and Chief Minister Neiphiu Rio have wished the people on the occasion.
In a message, the Governor said that Christmas is a time to "sink our differences, shun all forms of violence and come together to promote peace and harmony in the state".
Asking people to remember the true essence of Christmas in the spirit of love, forgiveness, brotherhood, sacrifice and peace, the chief minister said, "Let us all hope and pray that true peace and lasting tranquillity will pervade our land in the years ahead."