Police arrested almost 1,700 people, fired rounds of tear gas and used toxic-laced water cannons to disperse the crowds.
Opposition leader Anwar Ibrahim, who backed the demonstrations, says it was a coordinated attack.
The Malaysia Government says protesters were seeking to create chaos in the hope of getting arrested to portray the government as cruel.
Presenter: Luke Hunt
Speaker: Timothy Loo, protester; Marimuthu Manogaran, opposition politician for the Democratic Action Party; Saiful Razi, protester; Badrulamin Bin Bahron, information director for the chief minister of opposition controlled state of Selangor; Leon Gomez, protester
SFX: Fade in crowds chanting
HUNT: The opposition-backed rally known as Bersih, which means clean in Malay, was the culmination of weeks of intense pressure on Prime Minister Najib Razak's long-ruling coalition to make election laws fairer and more transparent. National polls are not due until 2013 but many expect Najib, who labelled the rally illegal, to call an early election possibly by November.
Police deployed under what they called "Operation Erase Bersih", sealed off key roads, deployed water cannons and then opened fire with tear gas as crowds formed and attempted to march towards the iconic Merdeka Stadium, where independence was declared more than half a century ago.
Stampedes followed, and the crowds dispersed into smaller groups and taunted riot police armed with batons, guns and shields.
Marchers were baton charged. Opposition leader Anwar Ibrahim was injured after police fired tear gas canisters into a tunnel. Another politician Khalid Samad of the Pan-Malaysian Islamic Party (PAS), was also injured when police fired a tear gas canister at his neck.
The protesters, however, remained defiant. Some wore yellow shirts. Most, fearing arrest, decided not to wear the colour synonymous with the movement. One man was dragged and kicked from outside the Chinese Maternity Hospital. Tear gas was then fired into the neighbouring grounds of Tung Shing Hospital where protesters had sought shelter.
Among them was Timothy Loo who had travelled from his home in Ipoh.
LOO: This will be the winter of discontent for the government because such a simple request for a peaceful rally they also don't want to give. Our demands are very simple, we just want a free and fair elections. For all these years there has been manipulation of the voting and other things. There must be reform and change. So this is the purpose of the rally.
HUNT: Opposition leaders have long accused Mr. Najib's ruling United Malays National Organisation (UMNO) of relying on fraud to maintain its 54-year hold on power. The government, however, insists the current electoral policies are fair.
Marimuthu Manogaran is an opposition politician for the Democratic Action Party.
MANOGARAN: Despite the police presence and oppression I see there's a large presence of people on the ground in the streets of Kuala Lumpur and what is very interesting is I see a large number of them are comprising of youths, Young people coming out there to demand their rights for electoral reform and I think that is a good sign for Malaysia. We are used to this tear gas and this chemically laced water from before but I think a lot of young people have not been exposed to it before and they are getting it for the first time now.
Among those overwhelmed by tear gas and the water cannon, which sprays a toxic laced mist into the air, was Saiful Razi from the youth wing of the PAS.
RAZI: My face, it want to burn, I cannot breathe very well, water came out from my nose, that was horrible so very horrible. We just want to march in peace, don't want any trouble just want peace.
Badrulamin Bin Bahron is the information director for the chief minister of the opposition-controlled state of Selangor. He said the large number of young people at the rally undermines government claims it holds the support of the nation's youth.
SFX crowds chanting
BIN BAHRON: Most of them are youngsters, youngsters and these people are our future. The youngsters are with us and the future of the country is in the hands of these youngsters, young men, young women -- inshallah - it will make a change.
Protester Leon Gomez, who marched with his wife and daughter, said organisers had intended the rally to be peaceful, but that the harsh response by the authorities had made that impossible.
GOMEZ: I think they were caught off guard, they didn't expect such a big crowd and such a big turnout and I'm so happy that my country has awakened itself not to be bullied by one single government.
HUNT: Of the 1,700 people arrested before and during the protests most have since been freed. However, the excessive use of force along with the detentions was sharply criticised by human rights groups.
Amnesty International described the campaign of suppression as the worst seen in this country for years. It also noted that Malaysia is currently a member of the United Nations Human Rights Council and suggested Kuala Lumpur should be setting an example for other countries to follow as opposed to baton charging and using tear gas to break-up a peaceful rally.