Vaiko urged people to burst crackers and offer special prayers at 7.18 p.m. -- which he said was the birth time of Prabhakaran.
The celebrations should take place wherever Tamils live around the world, he said in a statement. It should "echo the cause of Tamil Eelam", he said.
Prabhakaran was born into a middle class family in the coastal town of Velvettiturai in Jaffna peninsula on the northern tip of Sri Lanka.
He founded a militant group called Tamil New Tigers in 1972 and the Liberation Tigers of Tamil Eelam (LTTE) in 1976, and waged a prolonged war to secede the Tamil areas of Sri Lanka.
The Sri Lankan military killed Prabhakaran in May 2009 in a blitzkrieg that also reportedly claimed the lives of thousands of rebels as well as civilians.
The LTTE, accused of assassinating former prime minister Rajiv Gandhi, has been outlawed in India since 1992.