The crowds were undeterred by heavy police presence after authorities declared the rally illegal, blocked the organizer's website and banned yellow attire and the logo of Bersih, the coalition for clean and fair election that's behind the protest.
Najib has been fighting for political survival after leaked documents in July showed he received some $700 million in his private accounts from entities linked to indebted state fund 1MDB. He later said the money was a donation from the Middle East, fired his critical deputy and four other Cabinet members as well as the attorney general investigating him.
Protesters in yellow Bersih T-shirts and headbands converged at five different locations, in preparation to march to areas surrounding the Independence Square, where celebrations to mark Malaysia's 58th National Day will be held Monday.
Scores of riot police have sealed off roads leading to the square, which authorities have said is off-limits to protesters.
Some activists were carrying canvas bags with the words "My Prime Minister Embarrasses Me." Some held placards saying "We will not be silenced," while others chanted "Bersih" and waved Malaysian flags.
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A woman participant shows the support for the rally …
A woman participant shows the support for the rally of pro-democracy group "Bersih" (Clean …
In one area near the square, a comedian entertaining the crowd poked fun at Najib. Dressed up as an Arab, he pretended to hand over a multi-billion-ringgit check as a donation to a rally participant.
"Stop treating us like fools, Mr. prime minister," said businessman Tony Wong. "We deserve to know the truth about 1MDB. Where has the money gone to?"
1MDB, set up by Najib in 2009 to develop new industries, has accumulated 42 billion ringgit ($11.1 billion) in debt after its energy ventures abroad faltered. Critics have voiced concern about 1MDB's massive debt and lack of transparency.
Concerns over the political scandal partly contributed to the Malaysian currency plunging to a 17-year low, beyond 4 ringgit to the dollar, earlier this month.
Apart from Najib's resignation, the rally, which will go on overnight, is also demanding institutional reforms that will make the government more transparent and accountable.
A nation of 30 million, Malaysia is predominantly Malay Muslim with significant Chinese and Indian minorities. Its ambitions to rise from a middle income to a developed nation this decade have been stymied by slow-paced reforms and Najib's increasing authoritarianism.
This is the fourth rally organized by Bersih, and the third one since Najib took power in 2009. Tens of thousands of people turned up for the last two rallies in 2011 and 2012, which were dispersed by authorities using tear gas and water cannon.
Bersih activists said rallies were also held simultaneously in Australia and New Zealand, as well as in Kuching in Malaysia's Sarawak state and Kota Kinabalu in Sabah state.
Deputy Home Minister Nur Jazlan Mohamed has warned police will take action if the rally turns violent or protesters break the law. He has said that protesters should show their unhappiness with the government at the ballot box, not in the streets.
Support for Najib's National Front has eroded in the last two general elections. It won in 2013, but lost the popular vote for the first time to an opposition alliance.
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