Some two dozen protesters on Monday tore apart a large roadside poster of Hosni Mubarak, the Egyptian president.
Riot police reacted by charging at the group, dragging some of them along the pavement, beating them with batons and punching many in the face.
Other protesters grabbed canisters of tear gas and threw them back at the police.
Amr el-Kahky, Al Jazeera's correspondent in Egypt, said: "There is an uprising mostly led by the younger generation, 15- and 16-year-old boys, not the workers, who are throwing stones, as people had expected.
"There is a combined frustration at the government's failure to find resources to lower high prices and anger towards municipal council corruption."
Mubarak has lifted import duties on some food items in an effort to soften economic hardship brought on by a near doubling of prices of foodstuff due to international and local market pressures.
Even then, nearly 40 per cent of the country lives below or near the poverty line of $2 a day.
New strike called
The violence in Mahalla raged as Egypt's cyber dissidents set a new date for anti-government action on May 4, the same day that Mubarak will turn 80.
"We succeeded on April 6, so let's do it again on May 4," read a message on the Facebook social networking site where 64,000 people joined the group calling for action.
One member of the new Facebook group said: "If God created the world in six days, we can't expect to change Egypt in just one."
Egyptian police arrested several bloggers on Sunday, including Mohammed Sharkawi and Malak Mustafa, as well as Esra Adel Fattah, the creator of Facebook's April 6 group.