Celebrations were held in the streets around the Belgrave Road, known as the Golden Mile.
About 35,000 turned out for the lights switch on last week, and even more people are believed to have attended the main event.
Diwali is a celebration of light over darkness and is a major Hindu festival also marked by Sikhs and Jains.
Source: BBC Religion and Ethics
The annual Leicester event, which culminates in a large firework display in nearby Cossington Street Recreation Ground, is thought to be one of the largest Diwali parties outside India.
Manjula Sood, chairman of the Leicester Council of Faiths, said that like many Hindus, she started the day with family prayers at home before exchanging sweets.
"This year we are going to have a spectacular fireworks show and people will see how beautiful it is and then we greet each other on Belgrave Road," she said.
She added: "It's not only for Hindus, Sikhs or Jains. This has become such a wonderful festival. You see people from everywhere, not only Leicester. They come from outside Leicester and share in our joy."
As well as fireworks, people can enjoy Rangoli street art by artist Janak Chauhan as well as entertainment on stage in the park.
Across the rest of the city, events have been held to celebrate Diwali including arts and crafts at Newarke Houses Museum and Gardens and several shows at Curve theatre.
Belgrave Road and Belgrave Flyover will be closed to traffic from 17:30 to 21:30 GMT.
Tens of thousands of people have celebrated Diwali in Leicester city centre.