They carry black banners of mourning and wave red flags of revenge as they mourn the martyrdom of the great Leader of the Islamic Ummah, according to Tasnim dispatches.
They had gathered on the streets and along the route of the procession hours before the official start of the funeral in Najaf at 6 am local time.
The official funeral procession began after funeral prayers were held over Ayatollah Khamenei’s body at the holy shrine of Imam Ali (AS).
The procession moved from the shrine through Kufa Bridge and the Thawrat al-Ashreen intersection toward al-Sadreen Square before the body continued to Karbala.
Hashd al-Shaabi, Iraq's Popular Mobilization Units, said more than 2.3 million people had taken part in the funeral procession in Najaf and that the number was continuing to increase as mourners arrived from across Iraq.
Separately, Al Mayadeen television citing the Karbala governorate, reported that authorities had registered 7 million mourners in Karbala.
From before dawn, mourners streamed into Najaf from across Iraq, which reports describing the gathering as "million-strong" and "unprecedented."
Roads leading to the city were heavily congested as participants travelled from provinces including Basra, Muthanna and Maysan, while additional crowds entered Najaf from its eastern approaches.
The six-kilometer funeral route was filled with mourners carrying portraits of Ayatollah Khamenei and waving Iraqi, Iranian and Hezbollah flags.
The atmosphere in Najaf was marked by mourning as elegies and chants echoed across the city while a specially prepared vehicle carrying Ayatollah Khamenei's body slowly advanced through tightly packed crowds toward the main procession route.
Security forces and organizing committees worked to manage the crowds and maintain order throughout the ceremony.
Earlier on Wednesday, funeral prayers were held over Ayatollah Khamenei and members of his family at the shrine of Imam Ali (AS) in Najaf before the official procession began.
The bodies will be transported to Karbala following the Najaf ceremonies.
In Karbala, the bodies will be taken to the shrines of Imam Hussein (AS) and his martyred brother Abbas (AS) for farewell ceremonies.
According to reports, mourning tents have been established throughout the funeral route and black banners had been raised across Najaf's streets and public squares.
Correspondents said all roads leading into Najaf experienced exceptional traffic congestion as Iraqi citizens and foreign visitors continued arriving to attend the ceremonies.
Throughout the morning, crowds filled Najaf's streets in a historic farewell attended by unprecedented numbers of mourners.
The official procession followed a reception ceremony at Najaf International Airport for Ayatollah Khamenei's body attended by senior Iraqi officials and prominent political and religious figures.