The Queen and Duke of Edinburgh are travelling by carriage from Buckingham Palace to Horse Guards Parade.
The Duchess of Cambridge is making her first public appearance since she left hospital after giving birth to Princess Charlotte.
Prince George, who is two years old, was spotted watching the parade from a palace window.
There is speculation he may join his parents and the rest of the Royal Family for the first time on the palace's balcony to watch an RAF flypast later.
Trooping the Colour
Trooping the Colour has its origins in traditional preparations for battle.
Colours, or flags, were carried, or "trooped", down the rank so that they could be seen and recognised by the soldiers.
In the 18th Century, guards from the royal palaces assembled daily on Horse Guards to "troop the colours", and in 1748 it was announced that the parade would also mark the sovereign's official birthday.
The Queen's actual birthday was on 21 April, when she turned 89. The Duke of Edinburgh celebrated his 94th birthday on Wednesday.
It is the 63rd time the Queen has attended a birthday parade, a record unmatched by any monarch.
The Prince of Wales, who is Colonel of the Welsh Guards; the Princess Royal, Colonel of the Blues and Royals; and the Duke of Cambridge, Colonel of the Irish Guards, are riding on horseback in the procession.
Catherine, the Duchess of Cornwall and Prince Harry are travelling together in another coach.
The Duke of York is riding with his daughters Princesses Beatrice and Eugenie, and the Duke of Kent and the Duke and Duchess of Gloucester are in the final carriage.
The Earl and Countess of Wessex are away representing the Queen at thewedding of Prince Carl Philip of Sweden to former glamour model Sofia Hellqvist.
The procession is accompanied by a Sovereign's Escort of the Household Cavalry, made up of Life Guards and Blues and Royals, in their silver and gold breastplates and plumed helmets.
The Colour being paraded on Horse Guards this year is the flag of the 1st Battalion Welsh Guards.
The Prince of Wales Company, 1st Battalion Welsh Guards are trooping the Queen's Colour presented to them by the monarch at Windsor Castle in April.
Centenary year
The battalion last Trooped the Colour in 2013, but they are doing so again to mark their centenary year.
Since the last Queen's Birthday Parade, elements of the battalion have been on training exercises at home and abroad in places including the Falklands, Canada, Kenya, Kazakhstan and Belize.
Four of the five Foot Guards regiments of the Household Division - the Welsh Guards, Grenadier Guards, Scots Guards and the Coldstream Guards - are marching in the parade wearing bearskin hats and red tunics.
The Household Division Bands and Corps of Drums are also taking part, as are the King's Troop Royal Horse Artillery who, following the parade, will fire a 41-gun salute in Green Park to mark the Queen's official birthday.
Among the 31 aircraft taking part are Spitfires and Hurricanes, made famous in the Battle of Britain 75 years ago, and also modern jets including the multi-role Typhoon fighter.
The Red Arrows will form the finale.
