Palestinian president Mahmud Abbas is set to address the assembled masses at around noon (1000 GMT) at the Muqataa headquarters in the West Bank administrative capital of Ramallah.
Two years to the day since Arafat died in a Paris hospital, aged 75, Palestinians are celebrating the memory of the man who even in death embodies their struggle for independence and statehood.
Boycotted by Israel and the United States in his final years as an obstacle to peace, Arafat's passing refuelled hopes for progress on the Middle East peace process.
But two years on, Palestinians' daily lives have grown only more desperate.
In the runup to the anniversary celebrations, nearly a hundred Palestinians were killed in a week of Israeli army operations, mainly in the Gaza Strip, where Arafat had returned in triumph from exile in 1994.
The Palestinian state promised by Arafat remains a dream and Gaza and the West Bank are in the throes of anarchy amid a crushing aid boycott and a deadly power struggle between the rival Fatah and Hamas factions.

Copyright AFP (Agence France-Presse), 2006