Unity Day is marked with a show of military strength in the northern capital Sanaa
Reports from southern Yemen say at least three people were killed when police broke up an unauthorised demonstration in Aden.
Others were injured, and dozens of arrests were made. Reports say the police used tear gas and live rounds.
Protests were over poor living standards and alleged discrimination against southern Yemen by the authorities in the north.
Yemen is marking the anniversary of its historic unification in 1990.
Analysts say there has been rising tension throughout the south in the past two years, as the southern independence movement has gained strength.
It began two years ago when former southern military officials, forced into compulsory retirement, demanded higher pension payments.
The protesters have been accusing President Ali Abdullah Saleh of corruption and openly calling for independence from his government in the northern mountain capital, Sanaa.
The independence movement received an unexpected boost at the end of April, when Tariq al-Fadhli - a prominent ally of President Saleh and a veteran of the jihad against the Soviet Union in Afghanistan - switched sides and joined the southern independence movement.
In an interview conducted with the BBC on the eve of Unity Day, Tarik al-Fadhli set out his manifesto.
"Our demand is to separate from the north, to build a united south and secure the release of political prisoners held in Sanaa," he said.
Yemeni journalist Nasser Arrabyee says: "Tariq Fadhli is a controversial man. He has many supporters, mainly from the jihadists. He believes that the government in Sanaa is losing its hold over the south and he wants to play a leading role in the new political landscape."
When Mr Fadhli returned home from Afghanistan, he formed an alliance with President Saleh to defeat the Socialist power bloc who had previously controlled South Yemen.
He reclaimed his family land, with President Saleh's support, and became a key ally of the northern elite.
His break with Sanaa was reported towards the end of April 2009.
The former ally of Osama Bin Laden in Afghanistan rejected claims that he wanted to create an Islamist state in south Yemen, saying: "Far from it, we are in need of the West now."
He argued that Western donors had to insist on conditions and "stop their political and economic assistance" being used by President Saleh "to crush the people of the south."
If the south achieved independence under his leadership, he promised to tackle terrorism and improve maritime security in the Gulf of Aden "with integrity and co-operation with the West, especially the United Kingdom".
Mr Fadhli also called for Western diplomats to put pressure on President Saleh to allow the international media to have unrestricted access to the south.
President Saleh has ordered the
closure of several newspapers
in recent weeks for allegedly promoting separatism.
Analysts say fears that southern unrest could spark a civil war in
prompted the US administration to issue a statement on 3 May supporting "a stable, unified, and democratic Yemen".
President Saleh himself has warned that Yemenis "have to learn a lesson from what had happened in Iraq and Somalia."
President Saleh has ordered the closure of newspapers reporting the unrest
Tension in the south is leading some analysts to propose a federal solution - but many of Yemen's oil fields are located in the south.
A new liquid natural gas plant, which will generate much-needed government revenue when it starts operating this summer, is also located on the south coast.
Many of Yemen's current woes stem from a nationwide economic crisis, which is placing acute pressure on the state budget and informal patronage networks.
Revenue from the export of crude oil fell 75% in the first quarter of 2009, compared to the same period in 2008, in response to falling global oil prices and declining production inside Yemen.
Even if President Saleh can defuse Yemen's current political tensions, the country's long-term economic prospects look increasingly uncertain.