The marches were mostly peaceful but scattered violence was reported at the end of the march in the capital, Paris, and in some other cities.
Unions said some 1.5 million took part while police put turnout at 500,000.
Ministers say the law will reduce high youth unemployment but opponents fear it will entrench job insecurity.
Paris saw the biggest of Saturday's marches. Organisers said more than 300,000 people took part while the interior ministry put the figure at 80,000.
As the march ended, some youths overturned a car and set it alight and pelted police with missiles.
Hundreds were arrested during unrest in the city earlier in the week.
'Not disposable'
The Parisian march was in the main orderly and good humoured, Hugh Schofield reports.
In pictures: Mass rallies
The participants were a mixture of students, workers, pensioners and families.
"We are not disposable - we deserve better," student Aurelie Silan said.
"Aren't we the future of France?"
Civil servant Nicole Beauregard, who marched with her teenaged daughter, said: "Young people are less well-armed than we are to defend themselves.
"Getting into the workforce is already hard enough for them, and now they are putting up another obstacle."
In Toulouse, in the south-west, up to 33,000 people took to the streets while between 10,000 and 25,000 people demonstrated in Lyon.
Dijon, Marseille, Strasbourg and Bordeaux also saw large demonstrations.
Protesters are bitterly opposed to the new First Employment Contract (CPE), which allows employers to end job contracts for under-26s at any time during a two-year trial period without having to offer an explanation or give prior warning.
The government says it will encourage employers to hire young people but students fear it will erode job stability in a country where more than 20% of 18 to 25-year-olds are unemployed - more than twice the national average.
The demonstrations came after a series of mass protests by students in dozens of French universities, which have severely disrupted classes.
Political headache
The BBC's Caroline Wyatt in Paris says the street protests are fast turning into the biggest headache French Prime Minister Dominique de Villepin has had to face.
He came to office in the aftermath of the French "no" to the European constitution last May - a rejection that resulted from a similar mixture of mistrust of the French government and a wider sense of disgruntlement in France, our correspondent adds.
Mr de Villepin, the architect of the CPE law, said he was prepared to hold talks with labour leaders, but said the legislation would stand.
His government proposed the law as part of a series of measures designed to help youths in the French suburbs who took to the streets last year.
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