The Lychee and Dog Meat festival takes place annually in Guangxi province.
Earlier this year, US campaigners claimed that vendors had been told by authorities not to sell dog meat.
But stall holders had told the BBC they had heard nothing about this from officials. On 15 May, city officials confirmed there was no ban.
On Wednesday, reports from Yulin said dead dogs could be seen hanging from meat hooks at stalls in Dongkou market, the biggest in the city. There were also reports of a heavy police presence on the streets.