Followers of Iraqi Shia cleric Muqtada al-Sadr were faced with tear gas and stun grenades on Monday before they fled the government palace in Baghdad that they had stormed earlier.
Al-Sadr announced he would resign from politics on Monday before his angry followers stormed the palace, sparking fears that violence could erupt in a country already beset by its worst political crisis in years.
The chaos comes as Iraq's government has been deadlocked since al-Sadr's party won the largest share of seats in October parliamentary elections but not enough to secure a majority government.
He refused to negotiate with Iran-backed Shia rivals to form a consensus government.
In July, his supporters broke into the parliament to deter al-Sadr's rivals from forming a government and have been staging a sit-in outside the building for over four weeks.
His bloc has also resigned from parliament.
On Monday, hundreds pulled down the cement barriers outside the Republican Palace with ropes and breached the palace gates.
Many rushed into the lavish salons and marbled halls of the palace, a key meeting place for Iraqi heads of state and foreign dignitaries.
Iraq's military swiftly announced a city-wide curfew on Monday in the hopes of calming rising tensions and heading off the possibility of clashes.
It called on the cleric's supporters to withdraw immediately from the heavily fortified government zone and to practice self-restraint “to prevent clashes or the spilling of Iraqi blood,” according to a statement.
Later in the afternoon, security forces fired tear gas canisters and stun grenades to clear the premises of the government palace.