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A private funeral for O'Grady, who died on 28 March, will take place after a procession through the village of Aldington in Kent.
Hundreds of mourners, many with their dogs, gathered to watch the procession. O'Grady's husband Andre Portasio was emotional as he rode on a carriage drawn by two black horses with one of couple's dogs on his lap.
Actress Linda Henry, who plays Shirley Carter in EastEnders, LGBTQ rights campaigner Peter Tatchell and TV presenter Gaby Roslin were among those in attendance at the funeral.
Comedian Julian Clary, actress Dame Sheila Hancock, the late Dame Barbara Windsor's widower Scott Mitchell and EastEnders actor Scott Maslen were also seen at the church.
The Salvation Army Band played songs including Tomorrow from the musical Annie. O'Grady was starring in a touring production of the show at the time of his death.
His daughter Sharyn Mousley entered the church with a young man holding the wig of Lily Savage - O'Grady's drag alter ego.
Dogs from Battersea Dogs & Cats Home will form a guard of honour for the service, recognising his extensive work as an ambassador for the charity.
Some dogs could be seen wearing jackets identifying them as being from the home, with the phrase "rescue is best", as mourners gathered on Thursday.
O'Grady rehomed five dogs from Battersea while he filmed Paul O'Grady: For The Love Of Dogs and more than £270,000 has been raised for the charity since his death.
Crowds gathered in the village, where O'Grady lived for more than 20 years, from mid-morning on Thursday.
Many brought their dogs. One pup in a pram had a photo of O'Grady with a dog with the message "Thank you".
Celebrity chef Andi Oliver and Coronation Street star Sally Lindsay were among those petting the animals.
Other mourners wore T-shirts featuring pictures of dogs.
Pupils from Aldington Primary School displayed a collage of dog drawings they had done inside a large heart.
A bake sale was being organised outside the Walnut Tree pub with proceeds going to Battersea Dogs & Cats Home.
O'Grady, who rose to fame as his drag alter ego Lily Savage before going on to host a string of television programmes, died "unexpectedly but peacefully" at his home on 28 March at the age of 67.