But the giant Jama Masjid mosque in Srinagar -- a longtime focus for separatist protests -- remained closed as the government seeks to keep a lid on unrest after its strong-arm measures in the former Himalayan kingdom, media reports said.
"People are allowed to pray within their neighbourhood, there is no restriction on that," Dilbag Singh, Kashmir director general of police told AFP.
"But they should not venture out of their local area," he said by telephone.
In a sign of international concerns raised by Prime Minister Narendra Modi's move to tighten control on Kashmir, Pakistan's Foreign Minister Shah Mahmood Qureshi went to Beijing for hastily arranged talks with his Chinese counterpart Wang Yi.
Pakistan, which also claims Kashmir, has strongly condemned India's action but Qureshi has said his country would not seek a new conflict with its neighbour.
China, which also controls a sector of Kashmir, criticised India after the New Delhi government reaffirmed its claim for the whole territory this week.
The Indian-administered part of Kashmir has been in lockdown since Monday with no internet or telephones and severe restrictions on movement as the government cancelled its special autonomous status.
Tens of thousands of extra troops have been sent to the region, in the grip of a three-decade-old insurgency that has left tens of thousands dead, to impose the clampdown.
But there have been sporadic protests, with police chasing groups of pro-separatist demonstrators, many of whom gather at night, residents said.
Friday prayers are the start of a crucial test of New Delhi's ability to enforce the decision by Modi's Hindu nationalist government. The major Muslim festival of Eid al-Adha is on Monday.
The 600-year-old Jama Masjid remained out of bounds, Indian media said.
Protests against Indian rule have frequently broken out in Srinagar's old quarter after weekly prayers at the mosque, which can hold more than 30,000 worshippers.
Modi said in a nationwide address on Thursday that people will "not face difficulties" celebrating Eid.
Media reports said, however, that authorities would only decide on curfew restrictions on Sunday.
In a speech to the nation late Thursday, Modi strongly defended his intervention in Kashmir, passed with a presidential decree.
The right-wing prime minister called it a "historic decision" and added: "I have full belief that we will be able to free Jammu and Kashmir from terrorism and separatism under this (new) system."
He accused Pakistan of taking advantage of the region's special status to stir troubles there.