The gathering, called by the Shia Muslim group Hizb Allah and its allies, highlights deep divisions over Damascus's role in the country.
The demonstrators chanted pro-Syria solgans a mere 300m from where opposition protesters held daily rallies to demand a complete Syrian withdrawal form Lebanon.
Journalists at the scene estimated the crowd numbers at hundreds of thousands, while an official source and the television station of the Syrian-backed group Amal gave a figure of 1.5 million.
Hizb Allah chief Hasan Nasr Allah had said the rally would be held to thank Syria for what he called its sacrifices in Lebanon and to oppose a UN resolution demanding the disarming of militias. Shia Muslims are Lebanon's largest religious sect.
Hizb Allah, which began as a small guerrilla force devoted to ending Israeli occupation in the south of Lebanon, has developed into a sophisticated group with political, military and welfare bodies. It has several MPs in parliament and runs several charities.
Syrian troops in a mountain ridge east of Beirut continued preparations to pullback from their posts, a day after Syria promised to redeploy its troops to eastern Lebanon this month under a two-stage withdrawal.
The United States has dismissed the plan for failing to set a deadline for a full pullout.
Syrian President Bashar al-Asad agreed the withdrawal plan in talks with Lebanese President Emile Lahud in Damascus earlier in the week. Syrian forces intervened in Lebanon's civil war in 1976 and Damascus still has about 14,000 troops in the country.
The rally was staged just 300m
from the anti-Syrian protest
Buses and cars were ferrying supporters of Hizb Allah and its allies from across Lebanon. At the Riad al-Sulh Square, Hizb Allah members were setting up loud speakers and putting up Lebanese flags and banners.
Young men in black were looking after security, searching streets and even drainage holes for suspect objects.
"Thank you, Syria's Assad," a large banner said. "No to foreign interference," another said. "Beirut is free, America out," protesters chanted.
Nasr Allah had urged demonstrators to carry only Lebanese, not party, flags. Pictures of al-Assad and Lahud were also hoisted.
Pressure on Damascus
US President George Bush's administration warned Syrian leaders it would "hold their feet to the fire", and Britain, Germany and Lebanon's former colonial power France also put pressure on Damascus.
Hizb Allah (Party of God) warned of mayhem if Syrian troops were to leave Lebanon, where the 1975-90 civil war ended with a fragile balance between the country's diverse main religious groups. Lebanon is due to hold a general election by May.
Nasr Allah said the rally would
protest over UN resolution 1559
Set up by Iran's Revolutionary Guard in 1982, Hizb Allah is the only Lebanese faction to keep its guns. It won wide popularity after helping drive Israeli troops from southern Lebanon in 2000.
Syrian forces are credited with helping ending the civil war that tore Lebanon apart. Christian, Muslim and Druze militias fought each other in rounds of sectarian and inter-sectarian fighting. About 150,000 people were believed to have died.
A historic day
"This is a historic day in the history of Lebanon, a day that will found the future of Lebanon," Hizb Allah's media director Muhammad Afif told Aljazeera.
"This huge crowd is gathered under the title of rejecting resolution 1559, as many Lebanese people, including some opposition elements, reject this resolution.
"This demonstration does not come against the opposition protest in al-Shuhada (Martyrs) Square. We respect all Lebanese opinions, as they are democratic expressions.
"Lebanon is a democratic and free country. Everyone wants to express their opinions," he said.
Syria's role in Lebanon has come under fierce fire since a 14 Febuary bomb killed former Lebanese Prime Minister Rafiq al-Hariri. Damascus denied any involvement in the blast.
Opposition demonstrators, mainly Christian and Druze with some Sunnis, have staged several large anti-Syrian protests since al-Hariri's killing. On Monday, tens of thousands of flag-waving opposition demonstrators again took over central Beirut's Martyrs Square to demand a complete Syrian withdrawal.
Syrian soldiers based in the Lebanese mountain towns east of Beirut were dismantling military and communications equipment for a second day on Tuesday.
Syrian troops have begun
preparations to pull back
A Lebanese security source said the troops were sending equipment to other posts closer to the Syrian border to enable them to move out quickly when orders come later this week.
The source said a joint Lebanese-Syrian military committee would meet on Tuesday to fine-tune the pullback plan and give the go-ahead.
Under the agreement by al-Assad and Lahud, Syrian troops will complete their move to eastern Lebanon by 31 March. The Syrian and Lebanese militaries will then decide how long the troops should stay in the eastern areas before returning home.
Bush and French President Jacques Chirac confirmed in phone talks they were determined to obtain the full application of a UN Security Council resolution calling for all foreign forces to leave Lebanon, French officials said.
Lebanon's Lahud was set to hold consultations on Wednesday with parliament before naming a new prime minister-designate.
Political sources said outgoing Prime Minister Umar Karami appeared favourite to be asked to form a new government.
Karami, a staunch pro-Syrian politician, submitted the resignation of his cabinet on 28 Febuary under pressure from the opposition and street protests.