The body was airlifted from the Airforce Base in Accra.
The deceased's family objected to initial plans to bury him beside the late former president, John Evans Atta Mills in Accra at the Asomdwee Park.
Television pictures showed a simple grave dug in accordance with Islamic traditions in Tamale.
Early Sunday morning, the body of the late former vice president was laid at the State House to enable some selected dignitaries pay their last respect.
Prayers were also held for him at the Black Star Square in Accra during a short funeral ceremony.
His son Farouk Mahama, accompanied by some of his siblings, delivered a tribute saying: "Our late father was a special father...he insisted we do the right thing..."
"Alhaji Aliu Mahama, may the almighty Allah give you eternal rest..."
Presidential candidate of the New Patriotic Party (NPP), Nana Addo Akufo-Addo in a tribute delivered on behalf of the party, said: the NPP has lost a hardworking activist.
"I had my last conversation with him 2 weeks ago in Tamale", he recalled and stated that the former vice president can only rest in peace if full peace and reconciliation in Dagbon was achieved.
"Ghana has lost a patriot and a dignified national, Dagbon has lost its most illustrious son. May the almighty Allah grant him eternal rest."
Former President John Agyekum Kufuor in his tribute said Aliu Mahama “was not only my Vice President but my brother…We grew closer together and our families became close”.
My family shares deeply in the pain his demise has caused, he was the best veep any president would ever want to have, Mr Kufuor said and noted that throughout his eight-year rule, he and the late veep had no notable disagreements.
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