Many Uighurs resent the large-scale influx of Han Chinese settlers into the resource-rich region, and some groups are fighting to establish an independent Islamic nation, which has led to periodic violence in Xinjiang.
Beijing accuses the groups of links to al-Qaeda and claims this year to have foiled at least two Xinjiang-based plots targeting the Olympic Games.
But human rights groups accuse the Chinese authorities of using the alleged terror links as a way of cracking down on the independence movement.
The torch's visit to another potential hotspot, Tibet's main city, Lhasa, has also been moved forward in an attempt to avoid disruption.
In Urumqi, very tight security was put in place ahead of the relay.
Police carried out vehicle checks and set up checkpoints in the normally busy city.
The Olympic torch passes through Urumqi
Local residents who live and work along the route of the torch relay were instructed to stay inside, keep well away from their windows and watch the proceedings on television, the BBC's James Reynolds reports from Urumqi.
Our correspondent saw a handful of people daring to look out of the window in one office block, but every other window was empty.
We saw sizeable but very carefully chosen crowds on both sides of the road
People entering People's Square - where the relay began - had to pass through metal detectors while police searched their bags.
The majority of the crowd there were Han Chinese, and they waved flags of support, chanting "Go, China!" and "Go, Olympics!"
Nicola Dean, a British student in Urumqi, went to watch the torch relay. "There were a lot of people crowding the streets, little babies with Chinese flag stickers on their faces," she said.
"But the police wouldn't let anyone closer than 40m away from the path of the torch. There were traffic police, ordinary police and special forces police - and there were snipers in the tall buildings around the area. There were policemen in each building."
The flame's passage through the city was peaceful, but the danger of disruption to the Xinjiang leg has not passed.
On Wednesday the torch will move to the Silk Road oasis city of Kashgar, then to the cities of Shihezi and Changji on Thursday, before moving on to Tibet for a relay in Lhasa on Saturday.
Kashgar is already under tight security in preparation for the torch's arrival, and soldiers and fire fighters are reportedly patrolling the main square.
The city is seen as one of the main Islamic centres in the region - more so than Urumqi.
"Nobody is allowed to watch the torch relay tomorrow unless you are being organised by your work unit. I feel a lot of regret," Chen Guangsheng, a Han Chinese resident in Kashgar, told Reuters news agency.
"The police are coming to my house tonight to inspect it and to register everybody living there."
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