There are many Hadîths that provide clear evidences for the legality of celebrating the birth and raising of the Beloved Prophet şallAllāhu álayhi wa sallam.

First Hadith:

It is reported by Abdullah ibn Abbas rađiyAllāhu ánhu that the Beloved Prophet şallAllāhu álayhi wa sallam had migrated to Madina Sharīf and saw the Jews were fasting on 10th Muharram, Yawme Ashūra. He asked them why they fasted on that day. They replied that this was a spiritual and righteous day; a blessed day since on this day God gave Bani-Israel liberty and independence from firown, Pharaoh. The Beloved Prophet şallAllāhu álayhi wa sallam then said, if you are fasting on a day when Musa received success on this day(liberation from firown and his tyrannical government) then I am more closer to Musa than you. I have a better right than Musa over you. So I will fast on the same day due to this success, due to Allah’s blessing on him. So the Beloved Prophet şallAllāhu álayhi wa sallam ordered his Companions to begin to fast on the day of Ashūra.

Reference: Sahih Muslim, Book 6, Ch. 19 Hadith no. 2518, 2520.

This Hadīth is also contained in Sahīh al-Bukharī, (vol. 7, Kitab-al-Sawm, Ch. 29, Hadīth no.2157 and also in Kitab al Anbiya Ch. 24); in the Muwatta of Imām Malik, Kitab-al-Siyam, Hadîth no. 28; in the Musnad of Imam Ahmad bin Hanbal – vl. 2; as well as by Imam al-Asqalani who gives many references in his book, Fath al-Barī, Vol. 4, pg. 245-249.

This Hadīth creates the juristic principle that is permissible to celebrate a blessing of Allāh Almighty even if it is celebrating an event that took place on a particular day and in this case the blessing conferred onto the people was their liberation from Firawn through the means of their Prophet, Hadrat Musa alayhis salam. When the Beloved ProphetşallAllāhu álayhi wa sallam heard the answer of the Jews, he did not rebut their celebration, nor did he say it was not permissible to celebrate such a day. Instead he commented that the Muslims had a greater right to celebrate and thus asked the Muslims to fast on this day too.

It is clear from this Hadīth that if the day of Ashūra was made blessed due to Sayyidinā Musa alayhis salam and the Jews celebrated it out of gratitude to him and Allāh, then surely the day that the Beloved Prophet şallAllāhu álayhi wa sallam was made rahmatalil alimeen should also be celebrated by us. Sayyidinā Musa alayhis salam came just for theBanī-Isra’īl but Allāh Almighty sent His mercy, in the form of the Beloved ProphetşallAllāhu álayhi wa sallam to liberate the whole of mankind from all burdens. The birth of the Beloved Prophet şallAllāhu álayhi wa sallam came as a liberation from every kind of tyranny, cruelty and suppression. It was the day of the birth of justice and the establishment of haq, truth and righteousness. So how can we possibly resist in rejoicing and thanking Allāh Almighty for His Mercy on this day.

This same Hadīth is narrated again in Sahih al-Muslim, Kitab Ul-Sawm, Book 6 – Hadith. no.2528. Ibn Abbas rađiyAllāhu ánhu is again the reporter of this Hadīth but in this narration he says the Jews, in answering the Beloved Prophet’s şallAllāhu álayhi wa sallamquestion said they held this day with great esteem and regard, so they fasted on the day of Ashūra out of respect and reverence, known as th’azeem. If this is the case then does not the day of the rising and birth of Allah’s Beloved Prophet şallAllāhu álayhi wa sallamdeserve respect and reverence? If we can respect the day Sayyidinā Musa alayhis salamliberated the Jews then we can surely respect and revere the day the seal of the ProphetsşallAllāhu álayhi wa sallam was born.

It is sometimes argued that since the Jews celebrated the day of Ashūra through keeping a fast, any celebration based upon this Hadīth should thus be done just by fasting. Critics argue that in modern times Muslims celebrate the Mawlid Un-Nabī şallAllāhu álayhi wa sallam as an Eid which has no base in the Sunnah and has its roots in the Asian sub-continent. This however is an erroneous view. The Jews did not celebrate this day just through fasting. This is merely one of the acts that they did. Moreover even if they had only fasted on this day this still cannot detract from the fact that an event took place which was considered a blessing from Allāh Almighty and the Beloved Prophet şallAllāhu álayhi wa sallam made this blessing worthy of being commemorated, so much so that he made it a part of his Sunnah. In actual fact the Jews celebrated this day in many ways. The day of Ashūra was celebrated as an Eid and considered a great event where even the women were given beautiful dresses and jewellery to wear. In another Hadīth of Sahih al-Muslim, Kitab-al-Sawm, Bk. 6, and Hadīth no. 2522 Abu Musa rađiyAllāhu ánhu reported:

The day of 'Ashūra was one which the Jews respected and revered and they treated it as an Eid. The Messenger of Allah şallAllāhu álayhi wa sallam said: You also observe fast on this day.

In another Hadīth of Sahīh al-Muslim, Kitab-al-Sawm, Bk. 6, no. 2523, Abu MusarađiyAllāhu ánhu reported:

The people of Khaybar (most of them were Jews) observed fast on that day of 'Ashūra and they treated it as an Eid and gave their women ornaments and beautiful dresses to wear. The Messenger of Allah şallAllāhu álayhi wa sallam said: You observe fast on this day.

Also in Sahīh al-Bukharī, Hadīth no. 2005

What is interesting is that the Beloved Prophet şallAllāhu álayhi wa sallam did not question the celebration of the day as an Eid. He understood why they celebrated the day as an Eid and accepted this fact. He did not question the celebrations or even criticize the buying of new clothes and jewellery, nor did he prohibit the Companions from doing the same or confined them to just fasting. The reason is that this day was already a day of Eid and an accepted fact by all. It was not only the Jews but the Makkans themselves who celebrated this day as an Eid before the migration. This was not similar to the Eid of Sharī’āh, but similar to it in respect of the act of celebration. Imam al-Asqalani, in Fath al-Barī Sharh Sahīh al-Bukharī (Vol 4, pg 245) stated that this was the day when the Ka’aba was first dressed and so the Makkans celebrated this day as an Eid. The Beloved Prophet şallAllāhu álayhi wa sallam and the Companions were already celebrating this out of reverence and respect due to the ancient history involved. Imam al-Asqalani also quotes Abu HurayrahrađiyAllāhu ánhu who says that this was the day of Sayyidinā Nuh’s alayhis salam boat landing on the mountain of Judi, and thus celebrated for this reason too. That is why the Beloved Prophet şallAllāhu álayhi wa sallam did not ask about the Eid festivities but asked regarding the fast. It was only when the Jews began to criticize the Muslims later on did the Beloved Prophet şallAllāhu álayhi wa sallam ask the Companions to increase their fasts to one day before and one day after. By basing his arguments on this Hadīth, Imam ibn Hajar al-Asqalani establishes the legality of the Mawlid Un-Nabī şallAllāhu álayhi wa sallam, concluding:

...from this, we learn to perform the act of thankfulness to Allâh, the Most High on a certain day for a bounty He has bestowed or a disaster He has averted. And that act has to be repeated on the same day every year (anniversary). And thankfulness to Allâh, the Most High is done with different kinds of `ibâdât (acts of worship) likesujûd (prostration), fasting, giving charity and recitation (of the Qur'ân). And what bounty is greater than the bounty of the coming of the Beloved Prophet şallAllāhu álayhi wa sallam, the one who is the Prophet of Mercy on that day?

Imām Jalāl-Ul Millat Wad-Dīn Suyūti in al Hawī lil-Fatāwa (Vol 1, pg 302) also wrote a fully fledged Risalah on the Mawlid Un-Nabī şallAllāhu álayhi wa sallam.