Around 20,000 gathered in the capital against the new coalition government which includes the far-right Freedom Party (FPO), which was founded by former Nazis.
Some protesters carried placards reading “Never Again”, while others chanted slogans such as “Refugees should stay, drive out the Nazis.”
Austrian police said around 1,000 officers were on duty at the peaceful event, which was attended by a diverse range of people from students to pensioners, with the latter dubbing themselves Grannies Against The Right.
With Austria set to take up the EU presidency for the second half of 2018, demonstrators are calling for other European countries to boycott the new government when it takes up the role.
Last month, the FPO entered government as the junior coalition partner to Chancellor Sebastian Kurz’s OVP conservatives after a parliamentary election in which both pledged to stop illegal immigration and to fight radical Islam.
Despite the FPO saying it has left its founders’ Nazi past behind and denounces anti-Semitism, its opponents still accuse the party of being racist, sexist and anti-Jewish.
Benjamin Abtan, president of the European Grassroots Anti-Racist Movement, told demonstrators at the event: “It is very important that Austrian civil society is mobilised. The FPO are not just populists – they are an enemy of democracy.
“People don’t understand that the FPO is not a regular party, they are extremely radical.
“They should not have a seat at the top tables in Europe.”
Abtan cited comments from Interior Minister Herbert Kickl of the FPO, who last week said asylum seekers should be “concentrated” in special centres to help the authorities process their applications swiftly.
The wording evoked Nazi-era concentration camps and triggered a storm of protest in Austria.
Senior FPO figure Norbert Hofer on Saturday told Austrian radio that Kickl’s comments were not maliciously or consciously meant, and that human rights would be respected in dealing with asylum seekers.