The predominantly Russian-speaking province broke away from Moldova in 1990, and strengthened its de-facto independence in an armed conflict with Moldova in 1992.
Celebrations on Tuesday started at the Memorial of Glory in the capital, Tiraspol, with a flower-laying ceremony at the graves of those who died fighting for the republic's independence.
A flag-raising ceremony was held in central Tiraspol along with a parade of the republic's army, border guards, and police. A firework display will be held to round off the celebrations.
Along with Georgia's rebel regions South Ossetia and Abkhazia, which were recently recognized by Russia as independent states, Transdnestr has stepped its drive for self-rule since Kosovo's declaration of independence in February.
Trasdnestr has joined Russia in recognizing South Ossetia and Abkhazia, who have reciprocated by recognizing Transdnestr.
Delegations from Russia, Ukraine, Abkhazia and South Ossetia are attending the celebrations.
Transdnestrian President Igor Smirnov told the gathering: "On our 18th anniversary we are still celebrating as an unrecognized state. This is despite the fact that we have guaranteed ourselves economic and political independence and that all the norms of a sovereign state are functioning."
He said he hoped Transdnestr would soon join Abkhazia and South Ossetia in becoming an independent country.
In a referendum in Transdnestr, 98% of the population voted for independence and for future unification with Russia.
