Police have blocked off all access to Taksim Square and surrounded the headquarters of the Confederation of Revolutionary Workers Unions (DISK) in the nearby suburb of Sisli, where unionists were gathering before marching to Taksim.
Police used tear gas and water cannon mounted on armoured cars to try and disperse the crowds, who responded by throwing stones at police.
The government and state officials imposed a ban on all May Day celebrations in Taksim Square, saying that groups were planning to use the rally to cause civil unrest.
May Day celebrations have been forbidden in Taksim Square since 1977, when unknown gunmen opened fire on a massive crowd celebrating Labour Day, killing
37 and wounding dozens of others.
As part of police precautions against any rally being held in Taksim, ferry services from Uskudar and Kadikoy to Besiktas, Kabatas and Karakoy; tram services between Sirkeci and Kabatas, funicular services between Taksim and Kabatas and subway services between Mecidiyekoy and Taksim have been suspended.
On Thursday morning, DISK chairman Suleyman Celebi called on the state not to provoke tension.
Do not hamper May 1st celebrations of workers, do not resort to unlawful measures, he said. If the nose of any of the workers here bleeds, the government and the governor will be responsible for it.