All roads leading to May 1 Square were blocked and metal barricades were set up to prevent protesters from entering.
"The march was supposed to take place at 10 AM, but at 10:10, police quickly surrounded them and just pushed them back, Elias Filali, a blogger and activist who was at the rally told RFI. The police "divided the crowd into small groups and pushed them into different alleyways," he said.
"The people don't have much experience in terms of protest," he added.
Some managed to get into the square, where they chanted "Algeria free and democratic" and "People want the fall of the regime of president Abdelaziz Bouteflika".
Filali said that the protesters were only chanting and were not carrying anything. "They didn't have any weapons. It didn't look like these people were violent," he said.
Protesters are angry over high unemployment, housing and soaring costs of living.
Saturday's rally was organised by the National Coordination for Change and Democracy (CNCD), a month-old umbrella group made up of the political opposition, the Algerian human rights league and trade unions.
Filali said that police are being equally as heavy handed as with last weekend's rally which was quickly crushed by police. He also said that people who are detained are all eventually released, but are held for at least 10 hours.
"It's just a very very cruel regime here," he said.