Police fired water-cannon and tear gas on Friday at the protesters who turned out in the tens of thousands.
Many of the activists had marched peacefully in the police-authorised demonstration through Santiago ahead of a weekend Asia-Pacific Economic Cooperation (APEC) summit.
But as the procession culminated with a concert in a central park, small knots of masked protesters destroyed telephone cabins, smashed lamps and lobbed stones at police and through the windows of a closed McDonalds restaurant.
Riot police in armoured cars responded with water and tear gas, scattering people in the park. Organisers halted the concert.
Only moments earlier, there had been a near carnival-like atmosphere with families, children and young people rallying under tight police supervision.
Protesters held banners against
APEC and US President Bush
During a procession, scantily clad girls had danced the samba alongside a Brazilian beating drums, painted indigenous Mapuche people, two beauty queens (one them a transvestite), and Amnesty International activists with the Palestinian flag.
"No violence allowed here," read one banner.
"Bush terrorist, assassin," read another.
Four or five floats made to look like tanks rolled along.
An eagle made of plastic sheeting dragged plastic bottles behind it, the creation of the Interesting Patriotic Theatre Group, which said it represented the eagle of imperialism turning everything into garbage.
Fifteen people walked in silence blindfolded.
Antonia, 15, said: "These are the blindfolds they put over our eyes so we don't see the reality and exploitation."
Police took action hours earlier as young radicals tried to gather for a separate, unauthorised march.
They fired tear gas and water cannon as the protesters tried to cluster in the side streets and main Alameda boulevard, not far from where APEC leaders, including Bush, will huddle at the weekend.
In an extraordinary clampdown, officials declared a citywide holiday, prompting a long-weekend exodus from Santiago.