The first group of pilgrims entered Tibet via a Himalayan pass in mid-morning for the 12-day trip to Mount Kailash, which will also take in a holy lake, the official Xinhua news agency reported.
The opening of the pass was agreed last year when Chinese President Xi Jinping visited India.
The move will "further promote religious exchanges between the two countries", Xinhua said.
Few Indian pilgrims ever make it to Mount Kailash despite its significance, not only because of its remoteness but also because of difficulties in getting visas for China's tightly controlled region of Tibet.
China and India have growing commercial links and long historical ties, but their recent history has been overshadowed by suspicion and they have yet to sort out a festering border dispute.
China and India proposed measures to resolve the border issues while Indian Prime Minister Narendra Modi was in Beijing in May. Beijing has sought to clear obstacles to a relationship that it says could change the international political order.