"I was detained," Navalny he said on his Twitter account.. "But they won't be able to detain everyone."
Earlier, he told supporters he would defy house arrest to join them at Manezh Square on behalf of him and his brother, Oleg.
"House arrest, yes. But today I very much want to be with you," he wrote. "So I am going to Manezh Square." The statements have been translated from the original Russian.
He later said he was taken first to a police station, then to his home, which was being guarded by five police officers.
Several thousand people showed up to protest the convictions of the Navalny brothers despite a warning from Alexei Mayorov, a security official in the Moscow mayor's office, that any attempt to hold a rally would be quickly blocked because it has not been officially sanctioned.
The watchdog group OVD-Info says no less than 170 people were detained by police during the rally. Alexander Koyandr, Moscow correspondent for The Wall Street Journal, says he was briefly detained by police, who took his passport and press accreditation.Numerous photos on Twitter purportedly showed his arrest as well as the crowds of protesters, including some holding signs reading, "Navalny."
Police deployed around a central square just outside the Kremlin wall to try to control the demonstration.
The provocateur punk group Pussy Riot released a video supporting Tuesday's demonstration, featuring four stylishly dressed women sweeping snow from the square, then mounting their brooms and flying off as witches across the Kremlin wall in a performance symbolizing protest.
Two of the performers, Nadezhda Tolokonnikova and Maria Alekhina, spent nearly two years in prison on charges of hooliganism for mounting an anti-Putin protest in Moscow's main cathedral in 2012, and won global fame.Tuesday's verdict against Navalny in a Moscow courtroom was to have been announced next month, but the session was abruptly moved forward, leading to speculation that authorities wanted to impede possible protests over his expected conviction. The verdict comes as Russians are preparing for New Year's and Orthodox Christmas.
Navalny and his brother Oleg were convicted of defrauding a cosmetics company. Oleg Navalny was also convicted on Tuesday and sentenced to the same prison term, but his was not suspended.
"You want to punish me, but why are you putting him in jail?" Alexei Navalny shouted at the judge.
The brothers had both arrived at the courtroom with luggage, indicating they expected to be immediately sent to incarceration.
Navalny, a lawyer and popular blogger, rose to prominence with his investigations of official corruption and played a leading role in organizing massive anti-Putin demonstrations in Moscow in 2011 and 2012.
In a 2013 trial in a different criminal case, he was found guilty of embezzlement and sentenced to prison, but he was released the next day after thousands of people protested in the streets of Moscow. He was then handed a suspended sentence and finished a strong second in Moscow's mayoral election in September 2013.
At the conclusion of testimony in the latest trial, prosecutors asked for a 10-year sentence for Navalny. It was not immediately clear why the court chose the shorter term or why it was suspended, but that could reflect official concern about the prospect of unrest.
More than 16,000 people have said on Facebook that they would attend an unsanctioned protest called for Tuesday evening in Manezh Square adjacent to the Kremlin. The provocateur group Pussy Riot released a video Tuesday supporting the protest, featuring women sweeping snow from the square with brooms and then mounting them and flying off as witches.
Alexei Navalny remains under house arrest until his appeals process is exhausted.
