Organisers said the rally - aimed at raising funds for veteran opposition leader JB Jeyaretnam - was the first legally-sanctioned demonstration outside of an election period in Singapore.
Mr Jeyaretnam, popularly known as JBJ, is facing bankruptcy which, if declared, would automatically lead to him losing his parliamentary seat.
Addressing the crowd in Chinese, English and Malay, speaker after speaker denounced the ruling People's Action Party to enthusiastic applause - the first time the government has been openly criticised at a political rally.
Police initially denied the activists a permit to hold the rally, but relented after organisers agreed to hire their own security guards to maintain order.
Political apathy
Mr Jeyaretnam, wearing a T-shirt emblazoned with the words "We the People", urged Singaporeans to participate more in the country's political processes, saying the people were themselves to blame for their apathy.
Singaporeans had "continued to allow the government to sit heavily upon your shoulders," he told the crowd.
"They sit on you so heavily that you begin to stoop instead of standing upright."
The crowd burst into enthusiastic applause and cheered when he described the Singapore press as "a national disgrace" for allegedly biased pro-government reporting.
Significant event
The event might be sign of greater freedom of expression in a nation that has traditionally had little tolerance for dissent.
"The fact that the government has given permission for this is significant," said Zulkifli Baharudin, an independent member of Parliament.
Evelyn Martin, a 25-year-old bank teller said an opposition was needed because "the government is not always right."
The crowd chanted "JBJ" repeatedly throughout the event in support of the opposition stalwart.
Lawsuit debts
Mr Jeyaretnam will lose his seat in parliament if he cannot pay hundreds of thousands of dollars he owes in defamation lawsuits brought by senior government officials and their supporters.
He was recently declared bankrupt - a status that officially bars him from Parliament.
To help pay his bills, activists on Saturday are selling T-shirts, stickers and autographed copies of a book of his collected speeches.
Critics accuse the Singapore government of using defamation lawsuits against politicians and journalists as a political tool.
It dismisses such claims and says the suits are necessary to protect officials' reputations against false accusations.