The spiritual leader's body lay in an air-conditioned glass casket with gold plating in the main meditation hall of his Prasanthi Nilayam ashram to let the expected hundreds of thousands of followers pay their last respects, officials said.
Sai Baba, 84, died Sunday of multiple organ failure in a hospital near the south Indian ashram.
His death "is an irreparable loss to all," Indian Prime Minister Manmohan Singh said in a statement. "The nation deeply mourns his passing."
Giant screens placed near the ashram gates projected images of his body, evoking cheers and tears among the people waiting to get inside, The Indian Express reported.
Sai Baba was known for conjuring jewelry, food and vibhuti, or sacred ash, out of the air, which devotees saw as proof of his powers and skeptics called sleight of hand.
His gentle demeanor, Afro-style hair and embrace of many belief systems beyond his eclectic blend of Hindu and Muslim beliefs attracted an estimated 6 million active and 33 million passive followers, including former presidents, generals, film-industry luminaries and sports stars. His Sathya Sai Organization, which seeks to help people recognize the divinity within them, maintains more than 1,200 Sathya Sai Baba Centers in 130 countries worldwide.
Hundreds of thousands of followers were expected to attend his funeral, with state honors, in Puttaparthi, Sai Baba's hometown, Wednesday morning, officials said.
Authorities had marshaled about 10,000 security officers and issued rules on illegal assembly in case the crowds get out of control, the Los Angeles Times reported.
His legacy is not without controversy, including allegations, never proved, that he sexually abused young male devotees. In 1993 six followers were killed at his ashram -- four allegedly sought to assassinate him. The incident was never fully explained, the Times said.
His $9 billion Sri Sathya Sai Central Trust supports philanthropic educational, health and social activities in more than 160 countries, including hospitals and clinics that claim to cure illnesses beyond the capabilities of mainstream medicine, the BBC said.
In Canada, for instance, the Sathya Sai School of Canada was ranked by the conservative Fraser Institute think tank as one of Ontario's top elementary schools, scoring 10 out of 10 in the institute's academic performance rating.
The trust also funds several major drinking water projects in India. One project completed in 1996 supplies water to 1.2 million people in about 750 villages in the drought-prone Anantapur district in India's southeast coastal Andhra Pradesh state, the state in which Sai Baba was born and lived much of his life.
Sai Baba left no trust heir, raising fears of a custodial "succession war" over who would now manage the $9 billion.
Trustees include a former Indian chief justice, a former leader of India's commission to investigate alleged governmental corruption and a former industry group director, as well as Sai Baba's nephew.
Major Industries Minister J. Geeta Reddy, coordinating with trust members on behalf of the government, said despite succession-war fears, "The state government is not inclined to interfere at this juncture," the Express reported.
"Let the trust members, who are all very well respected and trusted, appoint a person to manage the trust," she said. "It remains to be seen if that person is accepted by millions of devotees or not."