Egypt was Mr Arafat’s second home and has been one of his closest allied in the years of struggle for Palestinian statehood. There are also unconfirmed reports he was born in Egypt.
The country is hosting the funeral to make it easier for foreign leaders to attend.
A French government plane transported Mr Arafat’s body to Cairo from Paris, where the 75-year-old spent his last days in a coma due to a mystery ailment.
The funeral is to take place at an officers club and military base, and the coffin will later fly to the West Bank town of Ramallah, where Mr Arafat will be buried at his headquarters, where he has been confined for the past three years.
Both a religious ceremony and military parade will be held, with Mr Arafat’s body born on a horse-drawn carriage.
Authorities have stressed the funeral is not open to the public, and surrounding streets will be closed off, due to security reasons.
At least 16 heads of state and government from mostly Arab and Muslim countries are expected to attend the military ceremony, and many European governments are sending foreign ministers.
Israel is boycotting the event and the US is sending a senior State Department official.
Mr Arafat received full military honours when his coffin arrived at Cairo airport, draped with a Palestinian flag.
While a military band played sombre music, a team of pallbearers in military uniform carried the casket out of the luggage hold and placed it on to a hearse.
Mr Arafat’s widow Suha embraced Egyptian first lady Suzanne Mubarak at the foot of the steps to the plane.
The Cairo ceremony reflects the fact that Mr Arafat did not leave to see his dream of Palestinian statehood fulfilled. Muslims would have preferred he be buried in Jerusalem.