Tens of thousands of people are in Brighton to celebrate Pride 2010, which began with a parade from the seafront to Preston Park.
The annual Pride event, which has been running since 1992, attracts visitors from all over the world and is one of the biggest days in the city calendar.
Sussex Police said they had made a "significant dent" in the illegal drugs trade surrounding the event.
A 50-year-old suspected drug dealer was arrested on Friday in Gloucester Road.
Police raided the house and confiscated 15lb (7kg) of a substance believed to be ketamine and more than £60,000 in cash.
Ch Insp Laurence Taylor said it was believed the drugs were intended for distribution at Pride, and would have had a street value of about £140,000.
Last year St John Ambulance dealt with a number of casualties at Pride as a result of ketamine.
Dozens of police officers from across Sussex, along with 90 stewards, are on duty at the festivities.
The parade was due to arrive at Preston Park by 1330 BST.
The majority of roads along the route reopened after the parade passed, but some traffic diversions will remain in place until the event ends at about 2030 BST.
The theme of this year's Pride, which had to be rescued from financial difficulty by Brighton and Hove City Council, is Pride and (No) Prejudice, with many revellers dressed in Regency costume.
Its future as a free event was secured in January after the organisers received a £20,000 loan to help meet a £50,000 deficit.
Brighton and Hove Pride said it cost over £250,000 to put on the one-day event, and the charity appealed to people attending to donate to bucket collections on the parade route and at the park.
It said it would be a spectacular day for residents of the city and visitors, with more than 150,000 people expected in Preston Park alone.
"The policing of Pride involves a substantial amount of preparation, planning, consultation and enthusiasm for what is the biggest annual policing commitment to the city," said Mr Taylor.
"The emergency services, the city council, the health service and numerous other agencies meet regularly with Pride organisers throughout the year in order to build on previous plans already in place and develop new ideas based on past experiences and feedback from last year's Pride."
Police have also issued an appeal to residents and landowners for information about any suspicious activity over the weekend - which might indicate that an illegal rave is planned.