Shouting 'Down with the USA' and 'Down with Israel", the demonstrators carried banners reading 'Israel must be wiped off the face of the earth' and 'We should all rise and destroy Israel.'
The protestors were joined by a number of high-ranking Iranian officials and military commanders.
The Israeli offensive, launched Saturday in response to a wave of rockets fired from Gaza, has killed more than 300 people and wounded more than 600 so far.
Iran's supreme leader Ayatollah Ali Khamenei on Sunday urged Muslim states to punish Israel and deplored what he said was silence by some Arab leaders in the face of the attacks.
The government has also called on all Iranians to hold anti-Israel rallies.
Teheran is a staunch supporter of Hamas but rejects allegations that it supplies arms to the movement, saying it provides moral backing only.
Iran does not recognise the Jewish state and President Mahmoud Ahmadinejad has repeatedly called for Israel to be wiped off the map and called the Holocaust a 'myth.' -- AFP