"Up to 500 people protested for two-and-a-half hours in Malieveld," a park in the centre of The Hague, police spokesman Cor Spruijt told AFP.
"Some 40 people were dressed as Black Pete," he added.
"Black Pete" accompanies Saint Nicholas during a children's festival on December 5, when the Dutch give gifts to each other.
The character, who arrives on a gift-filled boat from Spain, is typically dressed in a gaudy medieval costume and afro wig, with his face painted black and lips red, prompting charges of racism.
Opponents say the character recalls the time when Dutch colonists exploited slaves, notably in the Caribbean colonies of Suriname and Curacao.
Supporters of "Black Pete" angrily reject such accusations, offended at any suggestion that a character so central to Dutch culture could be racist.
Although the debate surfaces every year, this year the row is particularly bitter after the Jamaican chair of a committee at the UN High Commissioner for Human Rights, Verene Shepherd, bluntly told Dutch television that "the practice must stop".
"The working group cannot understand that why it is that people in the Netherlands cannot see that this is a throwback to slavery and that in the 21st century this practice should stop," she told the Eenvandaag show on Tuesday.
"As a black person, I feel that if I was living in the Netherlands I would object to it," she said.
Shepherd provoked further Dutch fury by suggesting they adopt a US-style "Santa Claus" instead.
Although opinion is divided in the Netherlands, a Facebook petition set up in support of the tradition had hit more than two million "likes" by Saturday.
The annual festival dates back to the sixteenth century, but the first appearance of "Black Pete" occurred in the 1850s.