Hurling Molotov cocktails and bricks at police in a nine-hour battle that ended on Monday, dozens of police were injured - many with broken bones.
The riot is one of the worst outbreaks of civil unrest in Sydney in at least a decade.
About 100 Aborigines attacked police and set fire to a railway station in Redfern, an inner-city suburb that is home to a notorious Aboriginal area called "The Block".
Protesters pelted lines of riot police with bricks and bottles, and at one stage pushed a burning rubbish bin on wheels towards police and set off fireworks among them.
Assistant police commissioner Bob Waites said rioters had eight bins loaded with paving bricks to be used as missiles and large tubs of beer bottles.
It took 200 police nine hours to bring the rioters under control, with about 40 police injured – eight seriously.
The riot was triggered by the death of Aborigine Thomas Hickey, who was impaled on a metal fence after falling from his bicycle on Saturday. He died in hospital on Sunday morning.
His mother, Gail, said her son was injured while being pursued by police. Police say patrolling officers merely passed by the boy who then sped off, losing control of his bike.
"My son's friends got wild...so they started throwing things at them (police officers). They deserve all they get," Gail Hickey told local radio.
"My 17-year-old boy was just coming down to get money off his mother and then these dogs...end up killing my son. How does a...17-year-old boy end up on the...fence? The police...killed my son."
Redfern residents posted their
own wanted posters for police
"The Block" is a ghetto of a few streets of dilapidated houses, some abandoned, smeared with graffiti and occupied by junkies, adjacent to the Redfern railway station a few kilometres from the city's central business district.
No go area
The area is a no-man's-land for white Australians and has been the site of confrontations between Aborigines and police for years.
The entrance to "The Block" looks like a military checkpoint, with concrete and wire fencing at the top of the main road. Black and gold Aboriginal flags, the standard for
black rights in Australia, are painted on walls.
Local Aborigines say tensions in "The Block" began rising after Thomas Hickey was badly injured in the bicycle accident.
After he died, wanted posters with the photographs of three police officers and the words "Child Murderers" started appearing around Redfern as Aborigines called for an inquiry into his death.
Redfern Aboriginal elder Lyall Munro said relations between Aborigines and the police were at an all-time low, saying police harassed young blacks on a daily basis.
"This type of thing is going to happen and our young people are going to die in this way whilst ever the police are allowed to get away with it," Munro said.
Aborigines remain Australia's most disadvantaged group, dying 20 years younger than other Australians with far higher rates of imprisonment, unemployment, welfare dependency and domestic violence.