Waving posters of Yasin and his successor, Abd al-Aziz al-Rantissi - who was also assassinated by Israel - the demonstrators in central Ram Allah cheered as a model of a Jewish settlement was torched.
Hundreds of masked gunmen from Hamas' military wing joined the crowds.
"This gathering is a massive show of support for the resistance and for Hamas' belief in our rights to Jerusalem and to the right of return" for Palestinian refugees, said Shaikh Hasan Yusuf, a Hamas leader in the West Bank.
He said that although Hamas would participate for the first time in Palestinian legislative elections in July, it did not mean the group was giving up armed struggle.
"Participation in political life does not mean that we are putting aside the resistance, because (resistance) is our strategic choice as long as we remain under occupation," Yusuf said.
Ahmad Abd al-Rahman gave a speech paying homage to Yasin on behalf of the Palestinian Authority, saying the mainstream Fatah movement and Hamas would "remain united against the occupation".
Hamas members burn effigies
during a rally in Ram Allah on Friday
"Our fighters are chasing you out of the Gaza Strip and they will also chase you out of Jerusalem and the West Bank," he said, referring to Israel's planned withdrawal from Gaza this year.
Farther north, more than 10,000 demonstrators gathered in a football stadium in Nablus, where another Hamas official told them the unofficial truce being observed by the movement would not last long if Israel continued its "aggression".
"This calm period will not last long if the aggression against our people continues," Muhammad Ghazal told the crowd, saying that the decision to observe an unofficial truce was taken not out of fear of Israel but after a period of serious consideration.
After talks in Cairo last week presided over by Palestinian President Mahmud Abbas, the 13 main factions declared they would maintain an unofficial truce until the end of the year.
Yasin, a 67-year-old quadriplegic, was killed in an Israeli air raid as he was leaving a mosque in Gaza City on 22 March last year.