The rally brings together activists for various causes and political creeds, from anti-poverty and environmental campaigners to animal rights supporters and anarchists.
Participants arriving from across Germany and Europe streamed out of cars and buses before making their way to a protest camp on the outskirts of town, where some 1,000 people had set up tents by early Saturday.
They held signs reading "Save the environment from the profit system" and "No intelligent people sells off their democracy." Another placard read "Stop TTIP!" - referring to the free-trade pact being negotiated by the United States and the European Union.
Police put the number of protesters expected to attend the afternoon rally at around 7,000.
In the town centre, hundreds of police vehicles lined cordoned off streets. Many businesses in Garmisch-Partenkirchen have decided to close for the duration of the summit.
The anti-G7 demonstrators launched their protests on Thursday when about 35,000 held a rally in the Bavarian capital of Munich calling for the G7 leaders to take action to head off the threat of global warming and to address the social fallout from globalization.
About 23,000 police have been deployed to guard the two-day annual summit of the leaders of the Group of Seven (G7) nations - the United States, Britain, Canada, Italy, France, Japan and Germany, which starts on Sunday.
US President Barack Obama is scheduled to land at Munich's international airport early Sunday.
He is set to travel with German Chancellor Angela Merkel to Kruen, a village with a population of under 2,000, where the two leaders will meet with residents and the mayor.
When the summit chaired by Merkel at the nearby Elmau palace hotel begins later Sunday leaders will consider a broad range of issues, from the current state of the global economy, through to terrorism and poverty as well climate change.
Merkel said Sunday she hoped G7 leaders will pledge to help meet the goal of preventing a global temperature rise of more than 2 degrees celsius in order to prevent the most dangerous effects of global warming.
The agreement in Elmau is needed in order to secure an ambitious, binding agreement at UN climate talks scheduled for December, Merkel said in a statement.
"That's why I hope that we can say clearly as G7 countries that we stand by this objective," she said.
The chancellor also said she expected leaders to agree to financing a 100 billion dollar fund that, from 2020 onwards, poorer countries can tap into to help expand climate-friendly economic activity, such as renewable energy.
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