The festivities, which are being attended by China's Hu Jintao in his first trip to the city since becoming president, will include pop concerts, street spectacles and cultural exhibitions, culminating in a grandiose fireworks display July 1.
The date marks 10 years since the British flag came down for the last time over the city of nearly 7 million following 156 years of colonial rule.
Although under the agreement with the British government regulating Hong Kong's handover in 1997 - which became known as "one country, two systems" - the territory was to remain free to govern its own affairs without Beijing's interference for 50 years, in practice Chinese authorities moved quickly to reassert centralized control.
As a result, in both political and economic terms Hong Kong has become increasingly dependent on the mainland over the past decade, with Beijing imposing its choice of leadership on the city from the very outset and systematically curtailing its people's freedom of expression, including of the controversial Falun Gong movement.
While a political opposition nominally exists, and the anniversary of the 1989 Tiananmen Square massacre is still commemorated every year, the territory increasingly takes its orders from Beijing.
As such, part of Hu's schedule during his visit includes the swearing in of Hong Kong's new chief executive, Donald Tsang, and his Cabinet to a new five-year term.
Tsang replaced the former chief executive, Tung Chee-hwa, who was forced out by Beijing in 2005.
And on Friday, Hong Kong and Beijing broadened the scope of a 2004 agreement binding their two economies more tightly together, known as the Closer Economic Partnership Agreement (CEPA), which will give Hong Kong's companies greater access to the mainland and further integrate them into China's booming markets.
However, while international rights groups sometimes decry Beijing's increasingly heavy hand, the territory's growing dependence does not seem to have overly worried the majority of Hong Kong's residents themselves, who have continued to fuel a vital economy and a stock market nearing record highs recently.
Thus despite a few notable setbacks in the immediate years following the handover, including an economic downturn and a SARS epidemic in 2002 that killed nearly 300 people, Hong Kong has continued to prosper as an international commercial and financial hub.
In a telling comparison, Hong Kong's administration has estimated that up to 80,000 people will gather to watch the fireworks display Sunday evening, while fewer than 50,000 are expected to attend an opposition protest rally the same day.
