Hundreds of police fired several rounds of tear gas shells to disperse small groups of protesters who emerged from alleyways in central Katmandu chanting "Down with autocracy, we want democracy." Many of the protesters hurled stones and scuffled with the police.
Security officials, who spoke on condition of anonymity due to policy, said they had orders to enforce a ban on rallies in Katmandu.
An Associated Press reporter at the scene said he saw 200 people being taken away in police vehicles and that 50 people had been injured, including six police officers.
The crackdown followed a series of raids in which security forces have detained senior politicians, student leaders and rights activists in recent days.
On Friday, several opposition leaders were placed under house arrest and more than 200 activists detained in an attempt to thwart protests against Gyanendra, who took power last year when he sacked an interim government.