Metro workers are incensed at the money spent on the tournament and are demanding a 12.2% pay rise
The BBC's Katy Watson at the scene said about 300 demonstrators were there and helicopters circled overhead.
The protest was called by Sao Paulo metro workers who are striking in support of a 12.2% salary increase.
Brazilian President Dilma Rousseff has said she would not allow violent demonstrations to mar the World Cup.
Sao Paulo metro workers have been on strike since Thursday, creating traffic chaos in one of the world's most congested cities.
At the sceneKaty Watson, BBC News, Sao
Paulo
It was a very tense start on Monday - only about 300 protestors gathered at one of Sao Paulo's metro stations but authorities weren't taking any chances - they deployed riot police on the streets, helicopters circled overhead and tear gas was thrown to disperse protesters.
Later on in the morning, the crowds swelled but the atmosphere changed - with music playing and whistles being blown, it was more of a rally than a confrontation.
The riot police lined up on the side of the street as well over a thousand demonstrators marched towards Sao Paulo's transport department - waiting in the wings in case any violence flared.
Altino Prazeres, the president of the union organising the strike, said that ruining the World Cup was not the strikers' intention.
"I love soccer! I support our national team. The point is not to stop the Cup,'' he told the AP news agency.
Some protesters set up barricades, blocking traffic in central Sao Paulo
"We want to resolve this today and all are willing to negotiate", he said.
The state subway company has offered an 8.8% pay rise but this has been rejected by the strikers.
Football fans are worried about the impact the strikes and clashes will have on the World Cup
On Sunday, union members voted to continue to strike indefinitely despite a court order for them to return to work and a threat of dismissal by the state governor.
On Monday, a spokesman for the company that runs the metro said 60 dismissal notices had been sent out to staff alleged to have been involved in strike-related disturbances in recent days.
Our correspondent in Sao Paulo says that police dispersed the protesters but that it was clear there was a great deal of bitterness about the money spent on the tournament.
If the strike runs on until Thursday, it could affect the opening match between hosts Brazil and Croatia.
Arena Corinthians stadium is on the outskirts of Sao Paulo and access to the venue without public transport could be a huge challenge for fans.
Preparations for the World Cup have been beset by construction delays and strikes but President Rousseff has said her government would "fully guarantee people's security" during the tournament.
Thousands of extra police and soldiers will be deployed to ensure the matches get under way smoothly.
Last year, more than a million people took to the streets of major Brazilian cities to vent their anger at what they see as excessive spending on the World Cup and the 2016 Olympics in Rio.
The government is keen to prevent a repeat of some of the violence seen at those protests.
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