Several thousand union and left-wing activists took part in the annual protest.
The Turkish parliament on Wednesday re-introduced a law making May 1 a national holiday. It had been taken off the public holiday list following a military coup in 1980.
On May 1, 1977, suspected extreme right-wing snipers shot May Day demonstrators in Taksim Square in Istanbul, killing 34 people.
Anita McNaught, Al Jazeera's correspondent in Istanbul, reported that there had been some skirmishes on the side streets around Taksim square, but the overall mood was "peaceful and not particularly tense".
"The authorities have a problem here - there is obviously a globally recognised need to celebrate May 1 as a workers' day. But this place has become a lightning conductor for protests because of previous crackdowns and because of the events of 1977.
"Today, the decision has been made to allow a limited number of protesters to come right to Taksim Square to commemorate workers' day but also to commemorate the people who died in 1977.
"This is a test of crowd control on the part of the Turkish authorities but also a test of restraint on the part of the demonstrators."
|Protesters have taken to the streets in cities across Europe to mark May Day[AFP]
In Germany, dozens of police were hurt as they clashed with protesters chanting anti-capitalism slogans in the cities of Berlin and Hamburg, authorities said.
Some 29 riot police were injured and 12 people detained when about 200 protesters threw bottles and stones at police.
The confrontation followed a street party in the eastern district of Friedrichshain.
Police said several rubbish bins were set on fire as the otherwise peaceful gathering of about 2,000 people was ending.
Protesters also threw bottles and stones at trams and cars. Several glass windows at bus stops were smashed.
In Hamburg, the authorities said three riot police were injured in clashes with demonstrators.
Police in Berlin were bracing for further violence on Friday as members of far-right parties, labour unions and left-wing groups prepared to march.
The economic crisis, which has increased unemployment and stoked public anger over rising wage disparities, along with simmering anger over "gentrification" in some low-rent districts, have raised police worries about this year's May Day.
May Day protests have caused extensive damage to parts of the city since they began in 1987, but they have been on the wane in the past three years after police shifted tactics from battling rioters to de-escalation.
May Day is traditionally marked by union rallies in many European countries and the global economic downturn is expected to swell the crowds this year.
Germany, Europe's largest economy, is suffering its worst recession since the second world war.
In France, the eight main unions have called for nationwide protests against the handling of the economy by Nicolas Sarkozy, the president.
May Day will be their third such day of action this year.
A union demonstration is also expected in Madrid, Spain.