The annual "Day of the Young Fighter" protest commemorates the 1985 police killings of two students during the presidency of Augusto Pinochet, Chile's late military ruler.
The day is often marked by violence and the night's protests were typical of the date.
The commemoration called this year was marked by anger over Santiago's reorganised public bus system, which users say causes undue waiting at stops.
One protester, who identified himself as Simon, his face covered by a white handkerchief, said that they were demonstrating "for the situation and for our rights".
Police deployed 4,000 officers and a dozen armoured personnel carriers around the city for the event.
Some hooded protesters threw Molotov cocktails in the south of Santiago, and the capital's universities closed early on Thursday to prevent a spill over of the protests on to their campuses.
Most shops in Santiago had closed by mid-afternoon.
|Shops and college campuses closed in Santiago|
as the day's violence escalated [Reuters]
Felipe Harboe, Chile's deputy interior minister, told Agence France-Presse: "During the day we had a national number of arrests totalling 475."
The Associated Press reported Harboe as saying 455 demonstrators had been detained at dusk on Thursday.
Harboe also said that most of those arrested in the afternoon were minors who were causing trouble near the presidential palace, La Moneda, in the centre of the capital.
By nightfall, the violence had spread to poor neighbourhoods, where protesters set up barricades and exchanged gunfire with police officers, according to television footage.
Rocks thrown by demonstrators broke windows at the intensive care unit of the Santiago Workers Hospital but no one was injured, Jose Abaca, a doctor at the hospital, said.
Students launched the first protest against Michelle Bachelet, the president, last year by demanding free student access to public transport.