Victims of Eta attacks and their relatives led protesters from all over Spain on Saturday, carrying national flags and placards reading "No negotiation in my name" and "Murderers in prison".
They marched between two squares that were the scenes of two of the bloodiest Eta car bombings - one that killed seven people in June 1993 and another that killed 12 in July 1986.
Organisers said a million people took part but official estimates ranged from a quarter of a million to 850,000.
Victims of Eta violence called the march after Spain's parliament gave Jose Luis Rodriguez Zapatero, the prime minister, permission last month to open peace talks with Eta if the group laid down its arms - a possible step towards ending 37 years of killing.
At the same time, thousands of supporters of a Basque party banned as Eta's political wing marched through the Basque city of Bilbao to back the party's peace plan.
Batasuna leader Arnaldo Otegi told supporters the party would do all it could to ensure its two-pronged peace plan, including talks between Eta and the government, was under way by next year's Basque homeland day, which coincides with Easter.
"Hundreds of thousands of people have come to fight against Eta ... and in no case negotiate with a terrorist organisation"
opposition Popular Party leader
"Eta has shown its predisposition to start talks with the Spanish government," Otegi was quoted as saying by Spanish news agency Europa Press, adding: "Despite all the obstacles, the process is going to start moving".
Eta, classed as a terrorist group by the European Union and the United States, has killed more than 800 people since 1968 in a campaign to carve out an independent Basque state in northern Spain and southwest France.
Leaders of the opposition centre-right Popular Party (PP), strongly opposed to talks with Eta, took part in the Madrid march, including former prime minister Jose Maria Aznar, who survived an Eta assassination attempt in 1995.
"It's a fantastic demonstration. Hundreds of thousands of people have come to defend decent ideas which are to fight against Eta, finish off Eta ... and in no case negotiate with a terrorist organisation," PP leader Mariano Rajoy said.
Many marchers shared the PP's view that a police crackdown on Eta in Spain and France in recent years, including hundreds of arrests, was bringing success in the fight against Eta and that Zapatero's overture was misguided.
The government, whose members stayed away from the demonstration, said the march will not change its stance.
The Spanish capital, Madrid, is a
favoured target for Eta
The peace offer has been greeted by a series of Eta bombings, the most serious a Madrid car bomb that injured 52 people last week.
Batasuna called the Bilbao march in support of a peace plan it announced last November which called for an agreement between political parties and unions in the Basque country and separate talks between Eta, France and Spain on demilitarising the conflict.
Otegi is due at Madrid's High Court next Wednesday to answer charges of belonging to Eta, a case Otegi's allies say could
derail peace efforts.