Earlier the mayor of Taipei, Hau Lung-bin of the main opposition Nationalist party that Chiang led for decades on the mainland and in Taiwan, said Chen lacked the authority to change the name to the National Democracy Memorial Hall.
Just before Chen arrived to unveil a plaque with the new name, around 500 people gathered in a nearby street, some scuffling with the large number of police on duty.
The controversy over the name change has highlighted Taiwan's deep political divide over Chiang's legacy.
Minutes after he spoke, survivors of a 1947 attack that a government commission later said Chiang ordered, gathered around the memorial.
They were cheered by Chen supporters and jeered by his opponents.
Nationalist forces killed thousands of Taiwanese after rioting broke out to protest their beating of a woman selling contraband cigarettes near the Taipei railway station.
In recent months Chen and his ruling Democratic Progressive Party have carried out several moves that nationalists say is chipping away at Chiang's legacy.
His name was removed from Taiwan's main international airport and the government has ordered hundreds of Chiang statues to be dismantled from military bases around the island.
But removing Chiang's name from the memorial Taipei is the most significant move yet, and Chiang's Nationalist successors have said they will respond forcefully in the run-up to next year's presidential elections.