The festival is taking place five decades on from the Stonewall riots of 1969 in New York, an uprising by young LGBT people that changed the face of the gay rights movement in the US and beyond.
Thousands of people are attending a parade in the Scottish capital, which this year has the theme This Is Me.
The annual march began outside the Scottish Parliament where the crowd heard speeches from campaigners and MSPs including Green co-convenor Patrick Harvie and Scottish Lib Dem MSP Alex Cole-Hamilton.
Mr Harvie looked back to the campaign which led to the scrapping of the controversial Section 28 or clause 2A law which banned the "promotion" of homosexuality in schools and said it is now important to stand together to fight for trans rights.
Earlier this week gender identification changes proposed by the Scottish Government were shelved to allow further consultation on the way trans people receive legal recognition.
Mr Harvie said section 28 was repealed because communities stood together and called for people to come together again.
He said: "Now those within our communities who are experiencing that same level of hatred, of stigma, of aggression and in this case of transphobia, they need to know that we will stand together again.
"I am sorry that this parliament very recently was used as a platform for transphobic hatred and bigotry but I am determined that we won't let that tell us we're going to lose."
He added: "It is not enough just to celebrate our victories. We have to ensure that the next 20 years will be another two decades where this parliament never does the wrong thing with our rights, with our equality, never pitches against one another, fragments our solidarity, we will stand together, we'll win again and I hope next year is a happier Pride for everyone."
Mr Cole-Hamilton said: "People ask me why do you still come to Pride, why does Pride still need to happen? We've got gay equality rights, we've got marriage equality?
"Pride matters because we still have frontiers to push back on, not just in terms of trans equality, but so many ranges."