The shaven-headed monks of Burma led a demonstration of more than 100,000 against the impoverished nation's military leaders.
Behind them in a column stretching for at least a mile through the city centre were civilians, students and political activists.
The march, cheered and applauded by thousands of bystanders, is the latest and largest in a series of protests by Burma's monks and dissidents. Diplomats fear that the country has now reached a turning point, with the generals who have ruled the country with an iron fist for nearly half a century facing the biggest challenge to their power for 20 years.
They could crush the dissent - as they did 1988, leaving at least 3,000 dead - or they can give the monks free rein - and risk the movement spreading across the country.
Last night there were rumours of soldiers massing on the city outskirts and imminent emergency law. Britain's ambassador Mark Canning said: "The demonstrations could subside - that's looking less and less likely.
"Secondly, that we could see some sort of counter-reaction, which would be a disaster, although in terms of probability it, I'm afraid, ranks quite high."
If the military do come down hard on the Buddhist monks, who are revered by the bulk of the population, it risks turning pockets of dissent into nationwide outrage.
Several hundred monks have marched into Yangon's Shwedagon Pagoda, the focal point of the largest anti-junta demonstrations in 20 years.
Many were carrying flags, including some bearing the image of a fighting peacock used by students in a 1988 pro-democracy uprising the generals crushed with the loss of around 3,000 lives.
Lorries with loudspeakers have been driving through Burma's main city of Rangoon warning residents to stop anti-government protests.
The protests started last month when the government decided to double the price of fuels. The rises meant staples such as rice and cooking oil suddenly became more costly. The monks became involved in steadily increasing numbers when troops broke up a peaceful rally on September 5. At least three monks were hurt.
At present, the junta's strategy appears to be softly-softly, analysts say, citing Saturday's decision to let 500 monks through barbedwire barricades outside the house of detained opposition leader Aung San Suu Kyi.
Democracy campaigner Suu Kyi's 15-minute appearance was the first time the 62-year-old Nobel laureate has been allowed to be seen in public since May 2003.
It is thought that neighbour China, which is counting on Burma's vast energy reserves to fuel its booming economy, is urging restraint on the generals.
© 2007 Associated Newspapers Ltd