However, after about half an hour, they allowed the demonstration to continue.
Ehab al-Ghsain, spokesman for the interior ministry in Gaza, said that rally organisers must seek a permit 48 hours before a gathering "so we can prepare protection for participants".
He said: "There is no decision to ban rallies by Fatah or others. Today's rally was stopped because organisers refused to seek permission."
Hamas has closed a pro-Fatah public television and radio station and a news agency, and controls all electronic media in Gaza, except for one radio station linked to the Islamic Jihad group.
"Hamas! What is happening in Gaza is not acceptable!" chanted the demonstrators on Monday.
"The refusal by the US, EU et al to deal with Hamas reflects their disrespect for the wishes of the Palestinian people"
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"What has happened to security and human rights?"
Nour Odeh, Al Jazeera's Gaza correspondent, said that journalists were also barred from the rally.
She said: "Cameramen recording the protest were not allowed to film, or get out of their cars."
Monday's incidents prompted the Palestinian Journalists' Syndicate to boycott activities of the Executive Force for three days, including interviews with its representatives.
The decision came after Executive Force members attacked two cameramen of Abu Dhabi TV channel and Ramattan New Agency and stormed the Gaza bureau of Al-Arabiya, the pan-Arab TV channel.
Ahmed Abdelrahman, an aide of Mahmoud Abbas, the president and leader of Fatah, criticised Hamas for Monday's events in Gaza City.
He said: "Today Hamas is continuing its crimes after its coup d'etat in Gaza and is imposing a military rule in the Gaza Strip against all Palestinian factions, undermining law and freedom.
"Hamas is imposing a despotic rule by force, arms, repression and barbaric actions."
He said the protest ban revealed Hamas's "true face and where they want to take the Palestinian people".
Jamil Mezher, a leader of the Popular Front for the Liberation of Palestine, that had participated with Fatah in the rally, urged Hamas to reconsider regulations that he said would "hurt Palestinian democracy".
He said: "What happened today was an ... attempt to suppress and terrorise people who have the right to hold peaceful demonstrations."
The Palestinian caretaker government is due to hold its weekly meeting in its headquarters in the West Bank city of Ramallah on Monday
The meeting, chaired by Salam Fayyad, the West Bank-based prime minister, is expected to address the latest developments in the Palestinian territories, including the Palestinian-Israeli meetings and the actions of the Executive Force.