The demonstration also comes after strong debate in a special session of the Israeli parliament, where Benjamin Netanyahu, the opposition Likud Party leader, led the call for Olmert to step down and called for an early general election - a ballot that opinion polls show his party would win.
During the session to discuss the scathing Winograd commission's report, Netanyahu said: "We have to go back to the people and let them have their say."
However Olmert's governing coalition has held together, with little apparent appetite among its members for an election.
On Wednesday, Olmert dismissed a public call to resign from Tzipi Livni, the foreign minister, and won critical support from loyalists in their Kadima party.
Crucial turnout
But Jacky Rowland, Al Jazeera's correspondent in Tel Aviv, said the real test for Olmert would be the strength of the demonstrations.
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"It would be best if he resigned and if the country elects a candidate who would reach for peaceful solutions"
Casey, Kitchener, Canada
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As night fell on Thursday, both secular and religious demonstrators crowded Tel Aviv's Yitzhak Rabin Square calling on Olmert to go, echoing the parliamentary debate earlier in the day on the inquiry's report.
Rowland said that many Israelis are simply sick and tired of politicians and politics.
Organisers said up to 70,000 were present by 8pm (17:00 GMT) and the Associated Press reported that turnout appeared to top 100,000. But police refused to estimate the crowd's size.
Yigal Armoni, one of Thursday's protesters, said: "We're here to tell Olmert ... to go. He's on the edge of a cliff. All he needs is a small push, but tonight we'll give him a big one."
Uzi Dayan, a retired general and a main speaker, said organisers decided not to allow politicians to address the crowd, to give the gathering a grass-roots nature.
He said: "The Israeli people don't trust Olmert and we can't go on like this. What you hear tonight is the voice of the people and you would need to be deaf not to hear a voice this loud."