Salman, who arrived in summer capital Srinagar two days back, is staying with Kabir and the other members of the film unit at the Pine and Peak Hotel here.
Actress Kareena Kapoor Khan is expected to arrive later this week and with her arrival, the shooting for the film will start, sources in the film unit said.
Nawazuddin Siddiqui is the other actor in the film, which is a romantic drama woven around a Muslim boy and a Hindu girl.
Salman is also the co-producer of the film with Rockline Venkatesh.
"Bajrangi Bhaijaan" will be shot in Pahalgam, Gulmarg and Sonamarg hill stations, sources said.
Although locals and hoteliers are happy with the arrival of the film unit here, many tourists are angry over security restrictions in the tourist resort.
"How can you impose restrictions on my movements in Pahalgam because some film star is here. The state government should have declared Pahalgam out of bounds for tourists because they are more interested in film shooting than normal arrival of tourists", said an angry Sunil Kumar, 34 who has come here from Delhi.
Locals are, however, happy because the return of Bollywood has always been a good omen for tourism in Kashmir.
"It is a good beginning. If film stars like Salman Khan keep coming to Kashmir, a strong message will go out that things are better here", said Altaf Ahmad, manager of Hotel Hilltop in Pahalgam.
The first Bollywood film unit to come to the Valley after last year's unprecedented floods was that of "Fitoor", which is an adaptation of Charles Dickens "Great Expectations" starring Aditya Roy Kapur, Katrina Kaif and Rekha.