Men and women of all ages set off with children in tow on a march from the residential neighbourhood of Ashrafiyeh to the interior ministry, demanding "the fall of the confessional regime."
Between 6,000 and 7,000 people joined the protest, the third since February 27. Another rally was held on March 6.
"I am here for the sake of a better future for my children. We are fed up. We want a better Lebanon," said Farah Ismail, a mother of two small children who joined the march.
"We do not want religion to mix with politics, we want to keep religion separate from the state," Imane Anane, a 38-year-old film director, told AFP.
"The sectarian mentality has touched my whole life," he said.
"Professionally, some institutions known to favour a particular community have refused to hire me because I am from another religion. Socially, I am de facto excluded from certain circles because I am of a different religion."
Inspired by the success of uprisings in Tunisia and Egypt, several groups demanding an end to Lebanon's confessional system have sprouted on the social networking site Facebook.
"Diversity can only be preserved by establishing a democratic civil and secular state based on competence, equality, and social justice," read the protest's rallying call, signed "Citizens."
"Confessionalism has turned the Lebanese into close-minded fanatics, created confessional cantons and an allegiance to the leader of each community," added Elia Faraj, 22.
Lebanon's system of government is rooted in a 1943 power-sharing agreement along confessional lines adopted after the country won its independence from France.
Aimed at maintaining a balance between Lebanon's 18 religious sects, the agreement calls for the president to be a Maronite Christian, the prime minister to be Sunni Muslim and parliament speaker a Shiite.
Other government jobs are also allocated according to religious affiliation.
The power-sharing arrangement has been blamed for most of Lebanon's problems, including corruption, cronyism and the devastating 1975-1990 civil war.
"Secular Lebanon against symbols of confessionalism," and "I don't want to change my country, I want to change the system," read some of the banners carried by marchers.
Protesters said they will continue to hold rallies until they eradicate all signs of confessionalism in Lebanon.