Yemeni authorities had stepped up security measures in the port city ahead of the public ceremony.
"Hundreds of protestors have been arrested," Ali Mounasser, the secretary of Aden's socialist party, was reported by the AFP news agency as saying.
Some of the demonstrators from the formerly socialist-ruled south of the country, called for their region to split from the north. The two regions previously merged in 1990.
A southern bid to break away in 1994 was crushed by northern forces loyal to Ali Abdullah Saleh, the Yemeni president, and many southerners say they have since faced discrimination.
Last August, thousands of protestors in the capital Sanaa called for the Yemeni government to resign because of falling living standards and rising food prices in one of the world's poorest states.
Suspected fighters
In an unrelated incident, al-Qaeda in Yemen has vowed to free its prisoners from the country's jails and retaliate for the killing of fighters by the government.
"By God we shall not rest ... until we free our brothers and sisters from the prisons," the group said in an e- magazine called "The Echoes of Epics", posted on the internet on Saturday.
Dozens of suspected al-Qaeda fighters are serving jail terms in Yemen for involvement in bombings and clashes with the authorities.
"The blood of Muslims will not go wasted," it said in an article signed by a man who identified himself as Abdul- Aziz. "The Prophet [Mohammad] ... has ordered that we free detainees," the e-magazine said.
In February 2006, a group of 23 prisoners, including convicted al-Qaeda fighters, tunnelled out of a Sanaa jail with help from sympathisers.
Several of the escapees have since been killed or arrested and some have surrendered to the authorities.