Police in riot gear stood on guard but did not move against the demonstration.
"It is a premeditated action, and this unbeliever thinks that she can fool us?" Yassin Mubarak, one of the demonstrators, said.
"What she did requires her life to be taken."
Gibbons was moved from the women's prison in Oumdurman to a secret location in the wake of the protest, Kamal al-Gizouli, her chief lawyer, said.
The demonstrators made their way to Khartoum's presidential palace for a rally while others burned newspapers that contained pictures of the teacher.
But they steered clear of Unity High School, where Gibbons worked. The school was guarded by police in riot gear.
|Gibbons says she did not intend to offend |
Islam through her actions [AFP]
Under Sudan's penal code, Gibbons could have been sentenced to 40 lashes, a fine or up to a year in jail.
Teachers at the school say that naming the teddy bear Mohammad was not Gibbons's idea.
They say no parents objected when she sent them circulars about a reading project that included the bear, introduced to the class in September, as a fictional participant.
Gibbons spoke on Friday with her son John in Britain by telephone, he said.
"One of the things my mum said today was that I don't want any resentment towards Muslims," he said.
David Miliband, Britain's foreign minister, said he was "extremely disappointed" with the verdict and called in the Sudanese ambassador for an immediate explanation.
Al-Gizouli, said that by prosecuting Gibbons, the Sudanese government may have sought to voice its resistance to including Western peacekeepers among the UN-African Union force that is to deploy in Darfur.
"You take an event like this teacher incident, enlarge it and make a bomb out of it," he said.
He sais the prosecution was to show that "Muslims in Sudan don't want these people [Westerners] to interfere, [they] want African troops."
Omar al-Bashir, Sudan's president, had long resisted any UN peacekeepers until he agreed to the joint force earlier this year.