Indonesian Land Transportation Drivers Association spokesman Daelami said over 10,000 drivers joined the rally which started at 9.00 a.m. at the House of Representatives complex in south Jakarta before heading to the communications ministry office, Xinhua news agency reported.
TV footage showed long lines of taxis blocking the roads while men, wearing taxi driver uniforms, are seen attacking on vehicles that refused to join the protest.
More than 5,000 security officers were deployed to guard the rally, according to Jakarta Police spokesman Senior Commissioner Muhammad Iqbal.
"We will take actions when the protestors violate the law and turn violent," Iqbal said.
The protest came after the government decided last week to allow the app-based transportation service providers to operate in Indonesia.
The Indonesian Car Rental Cooperative was officially recognised by the ministry for cooperatives and small and medium enterprises, following talks between the company, officials from the newly established cooperative and SMEs Minister Anak Agung Gede Puspayoga.
GrabCar and Uber have received fierce rejections from taxi and public transportation operators since they were first introduced last year, citing declining income among drivers and violation of the 2009 Road Traffic Law, under which their operation is not recognised as a form of public transportation.
In a response to the mounting criticism from drivers, Transportation Minister Ignasius Jonan issued a letter last November banning all app-based ride-hailing services, including motorcycle taxi apps Go-Jek and GrabBike.
Yhe move was overruled by President Joko Widodo.