The United States and the European Union voiced deep concern about the detentions, with the State Department describing them as an "affront to democracy".
Navalny had called for the protests that swept the country Sunday after he published a report earlier this month accusing Prime Minister Dmitry Medvedev of controlling a property empire through a murky network of nonprofit organisations.
As well as Moscow and Saint Petersburg, a number of provincial cities where protests are rarely seen also held demonstrations, attracting a significant number of minors born during President Vladimir Putin's 17 years in power.
Navalny, who has announced plans to run for president in the 2018 election, was arrested as he was walking to the Moscow protest.
About 7,000 to 8,000 people demonstrated in the heart of the Russian capital, according to police, making it one of the biggest unauthorised rallies in recent years.
Navalny, who spent the night in police custody, could face up to 15 days in police cells for having called for unsanctioned protests, his spokeswoman Kira Yarmysh wrote on Twitter.
About 1,030 people were arrested at the Moscow rally, according OVD-Info, a website that monitors the detention of activists.
The vast majority were released overnight after being fined, while about 120 remained in police custody on Monday, OVD-Info said.
One policeman was hospitalised after suffering a head injury during the Moscow rally, the interior ministry said.
The European Union urged Russia to release the demonstrators "without delay".
"We call on the Russian authorities to abide fully by the international commitments it has made, including in the Council of Europe... to uphold these rights and to release without delay the peaceful demonstrators that have been detained."
US State Department spokesman Mark Toner said the detention of "peaceful protesters, human rights observers, and journalists is an affront to core democratic values".
- 'Hope for a normal future' -
"I am proud of those who took to the streets today," Navalny wrote on Twitter on Sunday. "You are the country's best people and Russia's hope for a normal future."
Liberal business newspaper Vedomosti newspaper said Monday that the protests were reminiscent of the mass anti-government rallies that swept Russia in 2011 over vote-rigging after a parliamentary election, which snowballed into the biggest challenge against Putin since he took power in 2000.
The Russian constitution allows public gatherings, but recent laws have criminalised protests unauthorised by city authorities, which frequently refuse to grant permission for rallies by Kremlin critics.
Navalny, a 40-year-old lawyer by training, first announced plans to run for the presidency after he won a surprise 27 percent of the vote in the Moscow mayoral election in 2013.
But he has been the subject of several legal prosecutions in recent years, and in February he was found guilty of embezzlement and given a five-year suspended sentence which could make him ineligible to run in next year's vote.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.