Harry Styles, Louis Tomlinson, Niall Horan and Zayn Malik are among the family and friends attending the private ceremony, which is taking place at a church in the Home Counties. Simon Cowell, who put the band together on The X Factor, has also arrived for the service.
Payne, 31, died after he fell from a third-floor balcony at the Casa Sur Hotel in Buenos Aires, Argentina, on 16 October.
Fans from around the world have held their own vigils over the past few weeks, and tributes have been left today in his hometown, Wolverhampton.
Girls Aloud singers Nicola Roberts and Kimberley Walsh are also among those attending his funeral, along with TV and radio presenters including James Corden, Marvin and Rochelle Humes, Scott Mills, and Adrian Chiles, and former professional footballer Robbie Keane.
Dozens of locals and fans have also gathered outside the church, which has been decorated with candle lanterns and white roses.
Payne rose to fame alongside Styles, Tomlinson, Malik and Horan on The X Factor in 2010. Head judge Cowell put them together to form One Direction – and they went on to become one of the most successful UK pop groups of all time.
After the band announced their hiatus, the singer launched his solo career, releasing his debut album LP1 in December 2019.
His solo hits included Strip That Down, Bedroom Floor and For You, a collaboration with singer Rita Ora – who paid tribute to Payne as she hosted the MTV Europe Music Awards in Manchester.
He leaves behind his son, Bear, whom he had with his former partner Cheryl, and his parents and two sisters.
Prosecutors in Argentina have launched an investigation into Payne’s death and announced earlier this month that three people had been charged in connection with the incident.
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Payne’s One Direction bandmates all publicly paid tribute following his death.
“His greatest joy was making other people happy and it was an honour to be alongside him as he did it,” said Styles in his statement. “Liam lived wide open, with his heart on his sleeve, he had an energy for life that was infectious.
“He was warm, supportive and incredibly loving. The years we spent together will forever remain among the most cherished years of my life. I will miss him always, my lovely friend.”
Tomlinson said he had “lost a brother” and offered to be an uncle to Payne’s son, Bear, if he “ever needs me”.
Horan, who had been touring in South America and saw Payne at his show in the weeks before his death, said: “I feel so fortunate that I got to see him recently. I sadly didn’t know that after saying goodbye and hugging him that evening, I would be saying goodbye forever. It’s heartbreaking.”
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