"Kill! Kill!" the crowd shouted on Wednesday outside the aging Kerobokan jail, which is home to several Muslim fighters convicted in the 12 October 2002 blasts that killed 202 people, mostly young foreign tourists.
"Bring back our peaceful Bali," the crowd chanted as the rally wound down.
Those attacks were blamed on the al-Qaida-linked Jemaah Islamiyah network, which is also accused in the 1 October attacks in which three bombers killed themselves and 20 other people and wounded more than 100.
Earlier, survivors and relatives of those killed in the 2002 bombings gathered at the site of the attacks in the heart of the island's famous tourist district Kuta to remember the dead and send a defiant message to terrorists.
Thousands more Balinese turned out for a larger prayer gathering later in the day, saying they wanted to restore the island's image as a tropical paradise.
Security was tight, with snipers deployed on buildings overlooking a granite memorial engraved with the names of those who died.
Thousands of police were stationed in lanes leading to the ceremony, and five armoured personnel carriers were parked nearby.
"Bring back our peaceful Bali"
The mourners laid wreaths and marked 202 seconds of silence in memory of the victims.
Investigators have announced few breakthroughs in this month's attacks on three crowded restaurants and said on Wednesday that the only man arrested appeared to have no involvement in the blasts.
Bali police chief I Made Mangku Pastika said a 45-year-old construction worker who allegedly lived with the three suicide bombers in the lead-up to the 1 October attacks was "a zero, not even a small fish".
However, the man will be held for several more days for questioning, he said.