Around 60 trucks blocked morning rush-hour traffic on the giant square -- a major intersection at the foot of the Champs-Elysees that leads to a bridge over the Seine river.
The 70-metre (230-foot) Big Wheel has been a fixture of the Christmas village on the Champs-Elysees since 2000, drawing around 300,000 visitors a year with its breathtaking views of the city.
It made a return this summer around the Euro football tournament but has been the subject of controversy ever since.
The culture ministry has accused its 76-year-old owner, fairground king Marcel Campion, of illegally occupying a site of historic interest.
Campion has denied any wrongdoing, saying the City of Paris gave him permission to leave the wheel up until May 2017.
Demonstrators dressed as Father Christmas also gathered at the square, watched by dozens of riot police.
"Fairground stallholders support the Paris wheel," read a banner unfurled at the site.
Campion told reporters that he was "defending the world of fairgrounds" against what he sees as attempts to have them banished from Paris.
"I'm not a gangster," he said, pointing out that the Big Wheel "contributes to the city's fame."