Supporters of the long-time ruler, who turned 85 on February 21, raised more than $250 000 for the traditionally ritzy celebrations which include an 85kg birthday cake.
Crowds arrived in lorries, singing songs in praise of Mugabe, while banners proclaimed him a "great leader who never lets his people down."
The party, held in Chinhoyi, a town north of the capital Harare, comes as Mugabe’s political rival Prime Minister Morgan Tsvangirai is rallying the donor community $5bn in aid and investment.
Tsvangirai plans to attend the celebration, which he derided last year as "a gathering of the satisfied few" in a nation crippled by food shortages.
The country desperately needs the money to rebuild schools, hospitals and sewers after a decade of economic collapse, compounded by a political crisis recently ended when Tsvangirai and Mugabe formed a unit government.
The morning was filled with congratulatory speeches, with Mugabe expected to address the crowd later in the day.
Chinhoyi local Leo Matiyashe, who runs a food kiosk in the town, had to put business above pleasure as crowds flock to the party.
"I am in business looking for money and I cannot afford to close my shop to attend the birthday party."
A youth wearing a t-shirt emblazoned with Mugabe’s face headed towards the venue of the celebration, eager for a glimpse of the controversial Mugabe who has ruled since independence from Britain in 1980.
"The president is my hero. He has done a lot for this country and I will be happy just to see him," he said.
Chinhoyi is the provincial capital of Mashonaland west province, where Mugabe was born.
Several members of Mugabe’s Zanu-PF have farms in the area, and conditions are considerably better than the rest of the shattered country with a university and one of the best-equipped state hospitals.
Country in crisis
Zimbabwe’s healthcare system has fallen apart with over 83 000 affected by a cholera epidemic which has killed 3 800.
The country is battling severe food shortages amid hyperinflation which has rendered the Zimbabwean dollar useless. The World Food Programme reported last month that the number of people without food was estimated at 6.9 million – more than half the population.
Tsvangirai has appealed to the Southern African Development Community (SADC) for help, and the 15-nation bloc is expected to convene an emergency summit to evaluate Zimbabwe’s financial proposals.
"The economic environment globally is difficult, so we will do our best," South African Foreign Minister Nkosazana Dlamini-Zuma said after a meeting of regional ministers ended this week. – Sapa-AFP – SAPA