The demonstration marks an escalation of the country's worst crisis since the Muslim Brotherhood's Mohamed Mursi was elected president in June.
It also exposes the deep divide between newly empowered Islamists and their liberal and leftist opponents.
As the size of the crowd continued to grow, police fired tear gas and organisers urged demonstrators not to clash with Interior Ministry security forces.
The trouble was sparked when Mr Mursi issued a decree last week which expanded his powers and protected his decisions from judicial review until the election of a new parliament, expected in the first half of 2013.
His move also triggered a rebellion by judges and battered confidence in an economy struggling to recover from two years of turmoil.
Mr Mursi's opponents said he is behaving like a modern-day pharaoh. New York-based Human Rights Watch claimed the decree gives him more power than the military junta from which he assumed power after Hosni Mubarak was toppled in February, 2011.
So far the violence has claimed the life of one person – a Muslim Brotherhood activist. Hundreds more have been injured.