The two-day festival, called Gadhimai Mela Festival, takes place at the Gadhimai temple about 100 miles south of Kathmandu.
In 2009, an estimated 350,000 animals were killed. Close to 500,000 animals were expected to be sacrificed this year, despite campaigns to ban the festival.
Millions of Hindus from all over India and Nepal participate in the festival to honor the Goddess Gadhimai, a Hindu deity who devotees believe will grant them wishes if they sacrifice animals and birds.
In past years, nearly 70% of the animals entering Nepal to be slaughtered came from India. That figure has dropped since India's Supreme Court banned the illegal entry of animals to Nepal, especially for the Gadhimai Mela.
After the buffalo are killed, their heads are thrown into a freshly dug large pit in the field, and their hides are sold to the highest-bidding contractors.
Activists have petitioned Nepal's president to end this "cruel tradition" that began about 260 years ago. Still, the animal sacrifice ritual draws over 2 million Hindus to the festival site and remains an important religious holiday.