In a gesture of goodwill, the two nations held a prisoner exchange before the ceremonies began. Pakistan allowed 134 Indian prisoners to return home Monday, and India handed over 72 Pakistani prisoners on Tuesday, reported the BBC.
Indian President Pratibha Patil addressed the nation Wednesday with a message of hope and resilience.
"For our nation to rise and claim its glorious destiny, we must realize that it is our billion hands that can shape it," she said, the BBC reported.
Millions gathered in different sites around India to mark the occasion, and security was tight, especially in the capital.
In Delhi, about 70,000 policemen and paramilitary troops were posted at government buildings, diplomatic enclaves and main intersections, according to the BBC.
In the highly disputed region of Kashmir, over 100 people were detained amid threats by militants to disrupt the festivities.
Indian Prime Minister Manmohan Singh appeared at New Delhi's Red Fort, saying India must focus on the goals set by its leaders in 1947 in order to thrive as a truly independent nation.
He called for India to eliminate malnutrition in five years and touted educational opportunities, including greater access to universities and vocational schools, reported the Voice of America.
"We must not be overconfident," Singh said, quoted the BBC. "We have a long march ahead. We need at least a decade of hard work and of sustained growth to realize our dreams."
On Tuesday at the Wagah Border in the Punjab region, where the only road connecting the two countries exists, Islamabad's envoy Shahid Mallick raised the Pakistani national flag to commemorate the moment Pakistan gained its freedom.
"The gates were opened to the general public to witness the Independence Day celebrations," reported Daily India. "Guards of both countries exchanged sweets and congratulated each other on the occasion."
British Prime Minister Gordon Brown sent a message to Pakistani Prime Minister Shaukat Azi.
"I congratulate this great country, and send my best wishes from the British people," he said, according to the BBC.
In Islamabad, hundreds of thousands gathered in the streets to watch fireworks at midnight. There also were flag-raising ceremonies, music festivals and prayers across the country, reported the Hindustan Times.