People in the town, about 200 km from Hyderabad, voluntarily observed the shut-down to mourn the son of the soil, who was shot dead during a gun battle in the forests of West Bengal Thursday.
Shops and business establishments downed shutters while private educational institutions remained closed.
Mallojula Koteswara Rao alias Kishenji, the number three in the outlawed Communist Party of India-Maoist, was born in Peddapalli and had left his house 35 years ago to join the Maoist movement.
A Maoist ideologue and a master strategist, Kishenji never visited the town or his family after he went underground while studying law.
Local people and leaders of various organisations Saturday visited the house of Kishenji's brother Anjaneyulu to offer condolences.
A group of journalists from West Bengal also arrived in Peddapalli to interview Kishenji's mother, brother and other relatives. The local police gathered details of all the journalists.
Some family members of Kishenji have gone to West Bengal to receive the body of the Maoist leader.
The body is likely to be flown to Hyderabad Saturday night. The family plans to keep the body at Tank Bund to enable Maoist sympathisers to pay their last respects. It will then be taken to Peddapalli by road where last rites are likely to be performed Sunday.
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