Sources said the nuclear reactor on Arihant was made critical Friday night and the submarine was on its own power now.
They said activation of nuclear reactor was "a major landmark" in making the submarine operational.
Sources added the submarine would undergo extensive sea trials before being made operational.
INS Arihant has been undergoing trials at navy's submarine base in Visakhapatnam, Andhra Pradesh.
Manmohan Singh said the nuclear reactor's activation on India's first n-submarine INS Arihant "represents a giant stride in the progress of our indigenous technological capabilities".
In a congratulatory message, he lauded the scientists and defence personnel for activating the reactor on INS Arihant.
"I am delighted to learn that the nuclear propulsion reactor on board INS Arihant, India's first indigenous nuclear powered submarine, has now achieved criticality," he said.