"The people want to overthrow the corrupt government," the demonstrators chanted as they marched to central Sanaa from Change Square, the epicentre of protests that led to the ouster of president Ali Abdullah Saleh in 2012.
"Stop starving the Yemeni people" and "Stop decisions that kill them," their banners read.
They also waved Palestinian flags and called for an end to Israel's 28-day military campaign against Gaza militants which has cost more than 1,800 Palestinian lives.
The government's decision to raise fuel prices in the impoverished country came into effect on Wednesday, and motorists have since found that petrol prices have nearly doubled.
The protest was in response to a call by the commander of Shiite rebels who are known as Huthis or Ansarullah.
In a speech delivered on Sunday, commander Abdulmalik al-Huthi urged Yemenis to "take to the streets and revolution squares... to reject the decision" and to show support for Gaza.
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He described the protests as a "warning" to the Sanaa government.
Huthis, who have been battling the central government for years, repeatedly complained of marginalisation under Saleh, who ruled for 33 years.
Last month, Ansarullah finally agreed to withdraw from the strategic northern city of Amran, seized in a push towards the capital, following a deal struck with authorities after deadly battles with government troops.
Poverty in Yemen, one of the world's most food insecure countries, stands at 54.5 percent, according to a 2012 World Bank estimate.
Similar street protests over power cuts and fuel shortages prompted Yemeni President Abdrabuh Mansur Hadi to replace five ministers last month.
Since taking office in 2012, Hadi has struggled with the huge challenges facing Yemen, including the Shiite rebellion, an Al-Qaeda insurgency, and campaigns for secession in the formerly independent south.