His daughter, Zainab al-Khawaja, stood at the front of the crowd and accused the government of torture.
Police pushed protesters out of the marketplace, known as the Souk, and used stun grenades in an attempt to clear the crowd.
Reporters were kept behind the police line during the protest and were told that the protest was illegal.
Al-Khawaja, 52, was arrested in April 2011 for his role in anti-government protests that began a month earlier with demands for political reform and greater freedoms in the Sunni-ruled, Shiite-majority nation.
In June, Bahrain found him and seven other Shiite opposition activists guilty of plotting to overthrow the country's royal family.
The government has said he can appeal his life sentence during a hearing April 23.
Last week the human rights group Amnesty International asked for al-Khawaja's release, saying in a statement that Bahrain's "determination to persecute him seems to override any consideration for justice or humanity."
Zainab al-Khawaja said last week that her father was having trouble breathing and was harassed by hospital staff and security guards.
"His tone and the way he was speaking was like he was saying goodbye," she said on April 10. "We're not sure if we'll ever see him again."
The United Nations last week urged Bahrain to consider transferring the detainee, who holds Danish citizenship, to Denmark on humanitarian grounds, but a judicial panel has said al-Khawaja does not meet the conditions to be transferred into Danish custody, according to the Bahrain News Agency.
On Wednesday, al-Khawaja's hunger strike entered its 70th day.
