The rally, which has been banned since 1989, is part of ceremonies to commemorate the martyrdom anniversary of the third Shia Imam, Imam Hossein and his 72 companions during the battle of Karbala on Ashura, the tenth day of the lunar month of Muharram.
According to local media, the rally was held on its traditional route of Gurubazar-Dalgate in the capital Srinagar.
They said it happened after authorities in Indian-administered Kashmir reached a consensus with local religious groups to lift the ban in place over the past 34 years.
The ban was lifted on Wednesday following days of talks between the two sides.
Muslims in the Indian part of Kashmir hold two major processions on the 8th and 10th of Muharram. According to local media, the two ceremonies were banned in 1989 by the then governor administration on fears that they might turn into anti-India demonstrations. Since then, only small mourning processions were allowed.
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