Demonstrators shouted slogans slamming Morsi for what they claim are his betrayal of the revolution that ousted Mubarak. Morsi’s movement, the Muslim Brotherhood, was also condemned.
Protesters included journalists, lawyers and opposition figures, including Nobel laureate Mohammed ElBaradei.
“The people want to bring down the regime," marchers chanted, BBC reported, echoing similar slogans against Mubarak.
Other rallies took place in Alexandria and other towns.
"We don't want a dictatorship again. The Mubarak regime was a dictatorship. We had a revolution to have justice and freedom," a protester Ahmed Husseini told Reuters.
Morsi has sought to defuse the crisis by meeting with judges where he asserting that his new powers would only be temporary, but that declaration has clearly failed to appease the angry crowds.
"The main demand is to withdraw the constitutional declaration," said Amr Moussa, former Arab League chief who is now part of the opposition.
During a separate clash with police near the American embassy, one protester died of a heart attack after ingesting tear gas.
Al Jazeera correspondent in Cairo, Sherine Tadros, wrote of the protests: "This is a week day, so a lot more people would be coming in after work, so the climax of the demonstration may yet be in a few hours' time. And they are from all walks of life -- young, old male female. and if you ask them why they're here, the specific demand was for this decree [by Morsi] to be annulled.”