Hundreds of police surrounded the Lahore residence of Sharif, a former prime minister, before dawn on Sunday and detained him along with scores of his supporters, a party spokesman said.
Officers in the eastern Pakistani city showed party officials an order placing Sharif and his politician brother Shahbaz under house arrest for three days, spokesman Pervaiz Rasheed said.
Sharif denounced the order as illegal and later left the house in a convoy of vehicles packed with chanting, flag-waving supporters, headed for a downtown rally that had already turned violent.
Mobs accompanying the swelling convoy smashed the windows of buses parked along the route. Others torched tires, sending plumes of black smoke into the blue sky over a usually bustling boulevard littered with stones and empty tear gas shells.
"These are the decisive moments," Sharif told supporters before he climbed into his car. "I tell every Pakistani youth that this is not the time to stay home; Pakistan is calling you to come and save me."
Rao Iftikhar, a senior government official, said authorities reconsidered the restrictions on Sharif to allow him to address the rally and return home afterward.
Washington worries that the crisis will further destabilize the shaky the year-old government and prevent it from being an effective ally in the fight against insurgents in Afghanistan.
Suspected militants attacked a transport terminal in northwestern Pakistan used to supply NATO troops in Afghanistan before dawn on Sunday and torched dozens of containers and military vehicles, police said.
Lawyers and opposition party supporters had planned to gather near Lahore's main court complex before heading toward Islamabad to stage a mass sit-in front of Parliament, in defiance of a government ban.
To thwart them, authorities parked trucks across major roads on the edge of the city, and riot police took up positions outside the railway station and government buildings.
Still, several thousands flag-waving demonstrators pushed past police barricades to reach the courts.
Protesters pelted some of the hundreds of riot police ringing the area with rocks, triggering running clashes. An Associated Press reporter saw one officer led away with a head wound.
Police repeatedly fired tear gas, scattering the crowd, and beat several stragglers with batons, only for the demonstrators to return with fresh supplies of sticks and stones.
Shahbaz Sharif and a host of other protest leaders went underground to dodge their own detention orders. Iftikhar said they had been issued for the head of Pakistan's main Islamist party and cricketer star-turned-politician Imran Khan.
Television images showed police commandos wearing flak jackets and armed with assault rifles apparently searching for Shahbaz in Rawalpindi, just south of the capital.
The political turmoil began last month when the Supreme Court disqualified the Sharif brothers from elected office, over convictions dating back to an earlier chapter in Pakistan's turbulent political history.
Zardari compounded the crisis by dismissing the Sharifs' administration in Punjab, Pakistan's biggest and richest province, of which Lahore is the capital.
The brothers then threw their support behind plans by lawyers to stage an indefinite sit-in in Islamabad -- a move officials say would bring the government to a standstill and present a target to terrorists.
On Saturday, after U.S. Secretary of State Hillary Clinton spoke to both Zardari and Nawaz Sharif by telephone, the government announced it would appeal the Supreme Court ruling in the coming days.
Sharif's party welcomed the move but stuck by its demand for a shake-up of the judiciary.
Zardari refuses to reinstate a group of independent-minded judges fired by Musharraf.
Many observers suspect Zardari fears the judges could challenge a pact signed by Musharraf that quashed long-standing corruption charges against him and his wife, slain former leader Benazir Bhutto.
Skeptics suspect Sharif of hoping to force early elections, from which he and Islamist parties would likely profit.