Soldiers and a large number of security agents entered Qadam at 3:00 am on Friday (0000 GMT) and cordoned off the area, said Rami Abdel Rahman of the Britain-based rights group.
"More than 500 people were arrested during the operation, and one young man was killed at a security roadblock," he added.
Abdel Rahman said the authorities also banned public funerals in the district, and said the young man was quickly buried in the presence of security officials to forestall any demonstrations.
"The army put up barricades at all entrances to the area, and heavily armed members of the security forces carried out searches and made arrests," he said, adding that they had lists of names of people hostile to the regime.
"Security forces broke down doors when they weren't opened quickly enough, and then they posted people on the roofs of houses during the four-hour operation, he said.
The security forces were deployed en masse across the country for another day of protest after the Muslim weekly Friday prayers against the regime of President Bashar al-Assad.
Rights groups say that since the anti-regime protests in Syria erupted on March 15, nearly 1,500 civilians have been killed, 12,000 people have been arrested and thousands more have fled to neighbouring Turkey and Lebanon.