It is permissible to celebrate the Prophet’s birthday as an expression of love to the Prophet provided that the celebration doesn’t involve any of the prohibited acts.
In this regard, we would like to cite the following fatwa issued by Sheikh `Atiyyah Saqr, former head of Al-Azhar Fatwa Committee, in which he states the following:

According to historians, the Fatimides were the first to celebrate the Prophet’s birthday. Qalqashandi, in his book Subh Al-A`sha, says that the Fatimides used to make a huge celebration in Egypt and distribute large amounts of sweets for the occasion. Actually, the Fatimides used to celebrate the birthdays of other members of the Prophet’s family and they also celebrated Christ’s birthday. However, all of these celebrations were stopped in 488 upon an order from Caliph Al-Musta`li billah who appointed as prime minister Al-Afdal Shahindah, son of Commander-in-chief Badr Al-Jamali, a powerful man who conformed to the Sunnah as stated by Ibn Al-Atheer in his book Al-Kamel, volume 8, page 302.

People stopped celebrating such occasions till Al-Ma’mun Al-Bata’ihi came to power and issued an official decree in 517 enjoining the distribution of alms (sadaqat) in 12th Rabee` Al-Awwal. Sanaa’ Al-Malik was in charge of distributing them.

When the Ayoubides came to power, they stopped all Fatimide practices, but families used to celebrate the Prophet’s birthday in their houses. Then it returned to be officially celebrated at the beginning of the seventh century in the city of Irbil upon a decree from its prince, Muzafar Al-Deen Abi Sa`d Kawakbri Ibn Zein Ed-Deen `Ali- Ibn Tabakatikin, who was a Sunni.

Muzafar gave great care and attention to such celebrations and ordered marquis to be erected starting from the beginning of Safar. Such tents, which were wonderfully decorated and extended from Al-Qal`a gate till the Khandaq gate. Muzafar used to go everyday after `Asr prayer to watch the festivities in these tents.

The celebration was sometimes held on the 8th of Rabee` Al-Awwal (and sometimes on the 12th) which used to be an official holiday so that the people could enjoy the festival. Two days before the actual celebration, Muzafar used to order the sheep, cows and camels to be slaughtered in the main avenue amidst cheerful festivities, then the meat would be cooked and distributed among the people.

Ibn Al-Hajj Abu `Abdullah Al-`Abdari says that such festivals were widespread in Egypt during his rein and condemned the innovations that used to take place during such festivals. (Al-Madkhal, volume 2, p 11, 12)

Many books were written on the Prophet’s birthday in the seventh century such as the stories of Ibn Dahya, who died in Egypt in 633 AH, Muhy Ed-Deen Ibn Al-`Arabi, who died in Damascus in 683 AH, Ibn Taghrabik, who died in Egypt in 670 AH; and Ahmad Al-`Azli and his son Muhammad, who died in Sabata in 670 AH.

Due to the spread of innovation during such celebrations, scholars have denounced them and stated that they were groundless. Among those scholars is the Maliki jurist Taj Ad-Deen `Umar Ibn Al-Lakhmi Al-Sakandari known as Al-Fakahani, who died in 731 AH; he wrote his thesis Al-Mawrid fil Kalam `Ala-Mawlid on this issue and As-Suyuti quotes it in his book Husn Al-Maqsid.

Sheikh Muhammad Fadl `Ashur says that in the ninth century, scholars were divided over the issue. Some said it was permissible, others said it was not and it was recommended by As-Suyuti, Ibn Hajar Al-`Asqalani and Ibn Hajar Al-Haythmi, yet they condemned the innovations that took place during such festivities. Their opinion was derived from the verse: (And remind them of the days of Allah) (Ibrahim 14: 5).

Explaining the previous verse, An-Nasa`i and `Abdullah Ibn Ahmad report in Zaway’d Al-Musna
and Al-Bayhaqi in Shu’ab Al-Iman reports on the authority of Ibn Ka`b that he said that the Prophet (peace and blessings be upon him), said: ‘The days of Allah’ are Allah’s Blessings and Signs, and the Prophet’s birth is a great bliss.” (Al-Alusi’s Ruh Al-Ma`ani)

Muslim reports on the authority of Qatadah Al-Ansari that the Prophet (peace and blessings be upon him), was asked about fasting on Monday and he replied: “It is the day on which I was born and on which I received the Divine Revelation”. It is also reported on the authority of Ibn `Abbas and Ibn Jabir that the Prophet (peace and blessings be upon him) was born in the “year of the elephant” on the 12th of Rabee` Al-Awwal. He also received the Divine Revelation, ascended to the Heavens, migrated to Madinah and died on the 12th of Rabee` Al-Awwal.

The Prophet (peace and blessings be upon him), says that the day he was born was a special day. Since it is well known from the Sharia that Muslims should seize the opportunity in blessed days and do good deeds, Muslims should celebrate the Prophet’s birthday so as to thank Allah for guiding them to Islam through Prophet Muhammad (peace and blessings be upon him).

Therefore, celebrating the Prophet’s birthday is permissible provided that it does not include committing any of the prohibited things. As for throwing banquets, this comes under the verse saying: (O you who believe! Eat of the good things wherewith We have provided you, and render thanks to Allah if it is (indeed) He whom you worship.‏) (Al-Baqarah 2: 172)

My opinion is that celebrating such a religious occasion is recommended especially nowadays for youth have become forgetful of these religious occasions and their significance because they have indulged in other celebrations.

Celebrating such a great event should be done through reading more about the Prophet’s Sunnah and life, building mosques, religious institutes and doing other forms of charity work that remind people of the Prophet’s life and his struggle.

Therefore, it is permissible to celebrate the Prophet’s birthday as an expression of our love to him and our endeavor to follow him as an example provided that these celebrations do not involve any of the prohibited things. Some prohibited things are improper intermingling between men and women, behaving improperly at mosques and partaking in innovations such as worshiping at tombs and other things that violate the teachings of Islam. If such previously mentioned violations surpass the religious benefit realized from these celebrations, then they should be stopped in order to prevent harm and wrongdoing as indicated in the sharia.

Moreover, Sheikh Yusuf Al-Qaradawi, adds:

We all know that the Companions of the Prophet (peace and blessings be upon him) did not celebrate the Prophet’s birthday, Hijrah or the Battle of Badr, because they witnessed such events during the lifetime of the Prophet who always remained in their hearts and minds.

Sa`d ibn Abi Waqqas said that they were keen on telling their children the stories of the Prophet’s battles just as they were keen on teaching them the Qur’an. Therefore, they used to remind their children of what happened during the Prophet’s lifetime so they did not need to hold such celebrations. However, the following generations began to forget such a glorious history and its significance. So such celebrations were held as a means of reviving great events and the values that we can learn from them.

Unfortunately, such celebrations include some innovations when they should actually be made to remind people of the Prophet’s life and his call. Actually, celebrating the Prophet’s birthday means celebrating the birth of Islam. Such an occasion is meant to remind people of how the Prophet lived.

Allah Almighty says: (Verily in the Messenger of Allah you have a good example for him who looks unto Allah and the last Day, and remembers Allah much.) (Al-Ahzab 33: 21)

By celebrating the Prophet’s Hijrah, we should teach people values such as sacrifice, the sacrifice of the Companions, the sacrifice of `Ali who slept in the Prophet’s place on the night of the Hijrah, the sacrifice of Asma’ as she ascended the Mountain of Thawr. We should teach them to plan the way the Prophet planned for his Hijrah, and how to trust in Allah as the Prophet did when Abu Bakr told him: We could be seen so easily, the Prophet replied saying: “O Abu Bakr! What do you think of two when Allah is their third?”(Have no fear, for Allah is with us.) (At-Tawbah 9: 40).

We need all these lessons and such celebrations are a revival of these lessons and values. I think that these celebrations, if done in the proper way, will serve a great purpose, getting Muslims closer to the teachings of Islam and to the Prophet’s Sunnah and life.

As for celebrating `Ashura’, the Prophet (peace and blessings be upon him), celebrated this day by fasting only. He asked the Jews why they fasted on that day and they told him that it was the day that Allah saved Moses and the people of Israel. The Prophet replied saying: “We have more of a right to Moses than you.” (ٍSunan Abu Dawud). So he fasted on that day and ordered the people to fast on that day. He also said near the end of his life: “By Allah, if I lived longer I would fast on the 9th of Muharram.” (Sahih Muslim). That is, that he would fast on the 9th and the 10th in order to be different from the Jews who fast on the 10th only. However, some of the Sunnis celebrate `Ashura as if it were a feast. The sharia consider it a day of sadness and mourning, but all such things are innovations and are completely un-Islamic.
As for the exact date of the Prophet’s birth, it is a controversial issue among Muslims, but it is most likely to be on Monday, 9th Rabee` Al-Awwal (20th or 22nd of April, 571 AC), the same year in which the invasion of the Elephants took place against the Ka`bah. And he (peace and blessings be upon him) passed away on Monday 12, Rabee` Al-Awwal in the eleventh year of Hijrah (8 June 632 AC.)