Taliban leader Mullah Omar, meanwhile, called on the people to join the militants in their attempts to oust the government of President Hamid Karzai and its foreign backers.
Karzai told thousands gathered at Kabul city stadium that Afghanistan is once again threatened by a resurgent Taliban-led insurgency, and urged the people to focus on education.
The holiday marks Afghanistan's liberation from Britain in 1919, following the third Anglo-Afghan war.
"Again our land is under attack from our enemies," Karzai said, in reference to the Taliban-led insurgency. "They want to stop the development of Afghanistan."
Karzai delivered his Independence Day address in a stadium that once hosted public executions during the Taliban's rule, which ended with an invasion by U.S.-led forces in late 2001. On Sunday, it enjoyed a more colorful atmosphere, with a parade of Afghanistan's military forces and a display of the country's many national dresses.
Despite the presence of nearly 50,000 foreign troops in the country, violence has risen sharply during the last two months. This year more than 3,700 people — most of them militants — have died, according to an Associated Press tally of casualty figures provided by Western and Afghan officials.
Mullah Omar, the elusive Taliban leader who has been in hiding since the hard-line regime was ousted, called on the people to join the militant movement.
In a statement read to an Associated Press reporter in Pakistan, Omar said the militants battling Afghan and foreign troops "must win the hearts of the good people."
"They must try to avoid harm to the general public. Try to attract people from all walks of life — religious scholar, student, engineer, doctor, scientist, politician, writer, journalist and farmer to the ongoing (struggle)," said the statement, read for Omar by Zabeehullah Mujahed, one of the Taliban's spokesmen.
Omar also accused NATO and U.S.-led coalition troops of conducting bombing raids which were killing civilians.
Continued instability in Afghanistan, particularly affecting the country's south and east, threatens gains made since the ouster of the Taliban.
Repeated wars and conflicts have devastated the country of 25 million people in the last three decades, with scars still visible on buildings and with large swaths of minefields still littering the countryside.
Karzai said the Afghan people must be ready to make sacrifices for the country's freedom, but also need to focus on education.
"Without education, technology and science we will be under the attack of the foreigners," Karzai said. "For an independent Afghanistan, our youths have to get an education."