Thousands of pro-democracy activists forced the temporary closure of the Hong Kong government's headquarters after they clashed with police outside.
The demonstrators defied orders to retreat after more than two months of sustained protests.
Chaos erupted as commuters made their way to work, with hundreds of protesters surrounding Admiralty Centre in a tense stand-off with police.
The central government offices and the legislature were forced to close in the morning, as were scores of shops.
The latest flare-up, during which police charged protesters with batons and pepper spray, marked an escalation in the civil disobedience movement.
It also underscored the frustration of protesters at Beijing's refusal to budge on electoral reforms and grant greater democracy to the former British colony.
The democracy movement represents one of the biggest threats for China's Communist Party leadership since Beijing's bloody 1989 crackdown on pro-democracy student protests in and around Tiananmen Square.
Hundreds of riot police scattered the crowds in several rounds of heated clashes overnight.
They forced protesters back with pepper spray and batons as some tried to scramble over walls in a crush of bodies on a highway outside government headquarters.
Scores of volunteer medics attended to numerous injured, some who lay unconscious and others with blood streaming from head cuts.
Police said at least 40 arrests were made.
Hong Kong's security secretary Lai Tung-kwok defended the use of force, saying: "The police have to take resolute actions, they have no choice ... it is their duty to restore law and order."
As police tackled the running battles in Admiralty, tension escalated across the harbour in the working-class district of Mong Kok.
It had been the scene of violent clashes in recent weeks before the clearance of a large protest encampment from a major road there last Wednesday.
The protesters are demanding free elections for the city's next leader in 2017 rather than the vote between pre-screened candidates that the Chinese government has said it would allow.
The United States issued a fresh appeal to Beijing to exercise restraint in Hong Kong.
"We encourage differences between Hong Kong authorities and protesters to be addressed peacefully through dialogue," State Department spokeswoman Jen Psaki told reporters.
Meanwhile, China has refused to grant visas to a delegation of eight British MPs who wanted to visit Hong Kong.
