The rally took place in Ad-Dawr, the village north of Baghdad where Hussein was captured by U.S. troops in December 2003.
Demonstrators fired guns in the air and chanted, blaming Shi'ite leaders such as radical cleric Muqtada al-Sadr, Prime Minister Nuri al-Maliki, and Grand Ayatollah Ali al-Sistani for carrying out the death sentence.
At a memorial rally in the Jordanian capital, Amman, Hussein's eldest daughter, Raghad, hailed her father as a "martyr."
Around 1,000 people attended two separate rallies in the West Bank, where Hussein was seen by many Palestinians as a generous benefactor.
Iraq's main Sunni clerics group today blamed the United States for Hussein's execution.
In an Internet statement, the Muslim Scholars Association called Hussein's hanging for crimes against humanity on December 30 a "purely political act." The group also lashed out at the fact that the execution was conducted during Eid al-Adha, one of Islam's holiest periods.
Meanwhile, news agencies quote witnesses as saying police have stopped Hussein's supporters from reaching his grave in his home village of Al-Awja.
In the nearby town of Tikrit, dozens of tents have been erected for mourners to gather to honor Hussein.
(compiled from agency reports)
Saddam Hussein: Looking Back
A DICTATOR'S LIFE: A photo gallery of images from the life of former Iraqi President Saddam Hussein.
MORE: A timeline of the life of Saddam Hussein.
