Police used tear gas against the demonstrators
Security forces used tear gas and rubber bullets on the rioters, who had gathered on Thursday to protest against the way police have dealt with recent unrest in the region.
Officials said one of the demonstrators hurt in similar clashes on Wednesday has now died from his wounds.
Three people have now been killed since unrest broke out in the region two weeks ago.
Protest march
The violence on Thursday began during a protest march in Kabylie's main town, Tizi Ouzou, and was organised by local Berber "aarchs", or community leaders.
The demonstration was called in protest at the police occupation of the Berber headquarters in a Tizi Ouzou theatre since Monday.
The activists amassed on the outskirts of the town, and erected barricades to stop police from charging at them when they marched on the city centre, witnesses said.
Town authorities had banned the rally and set up road blocks to try to prevent protesters from nearby villages reaching Tizi-Ouzou, a town about 100 kilometres (60 miles) east of the country's capital Algiers.
Violence broke out at a road junction near the former base of the gendarmerie, or paramilitary police - which has recently been replaced by the ordinary police force.
One man, named as Rabah Hamdi, sustained a serious head wound from a teargas grenade, and a doctor said he was "pessimistic" about his condition.
At least 28 people have been arrested in recent days on charges of riot incitement, damage of state property and arson, police said.
Strained relations
People of all ages took part in the demonstration.
They came from towns and villages around Kabylie, a region inhabited mostly by ethnic Berbers.
Berbers make up about one fifth of the country's 31 million population, and have long sought official recognition of their language and culture, as well as economic and social benefits.
Berbers claim to be the initial inhabitants of Muslim North Africa, and they have long had a strained relationship with Algerian authorities.
Protests in the region have intensified since Algerian President Abdelaziz Bouteflika rejected calls from Berber groups earlier this month to withdraw security forces from the Kabylie region.
Gendarme police units began pulling out of key towns in Kabylie on Monday, but Berbers demand a total withdrawal.
They also say that recent promises by the government, including recognition of the Berber language Tamazight, are not enough - and are merely a tactical ploy ahead of the general election due in May.