Dahal briefly led a coalition government after winning polls in 2008, but resigned from government last year when he was prevented from dismissing the army chief.
The Maoists still hold the largest number of seats in parliament.
Madhav Kumar Nepal, the country's prime minister, said that bringing the nation to a halt would do nothing to strengthen democracy and appealed to the Maoists, formally called the Communist Party of Nepal, to call off the strike.
"Shutting down the nation is not the way to find a solution to this impasse," he said in a live television address.
"All-party consensus is the only alternative that will pave the way forward"
Madhav Kumar Nepal,
"All-party consensus is the only alternative that will pave the way forward."
About 15,000 riot police were deployed across Kathmandu for Saturday's protest, but the event passed without violence.
Demonstrators waved red flags and chanted "dissolve this puppet government and set up a national government".
Shops and businesses were closed and residents were stockpiling food in fear that supplies might run short in the event of a national shutdown.
As demonstrators were massing for the rally, the Maoists were meeting representatives of other major parties to try to break the political deadlock.
Karin Landgren, the chief of United Nations peace mission in Nepal, said she had met Maoists leaders to appeal for peaceful resolution.
"I am deeply concerned that despite these peaceful intentions, potential spoilers of the peace process could provoke a clash," Landgren said on Friday.
The Maoists fought government troops until 2006 when they gave up their
decade-old uprising and joined a peace process.