More than 100 Los Angeles police officers, including dozens in white protective suits, surrounded the Occupy L.A. camp on the City Hall lawn early Wednesday and began to dismantle tents and other shelters.
Officers in riot gear and armed with night sticks closed off streets around City Hall.
Police used bullhorns to threaten protesters with arrest.
"This has been declared to be an unlawful assembly. You have seven minutes to gather your belongings and decide to leave," one officer said.
Officers were met with profanity but no violence.
Dozens of Los Angeles Fire Department paramedics and firefighters were also standing by on sealed off downtown streets.
"This is what a police state looks like!" Occupy protesters chanted at the officers in riot gear.
Demonstrators said they were preparing for possible arrests after they refused to observe a city order to disperse from the City Hall grounds Monday morning.
One Occupy protester wearing a bandana mask over his mouth told CNN affiliate KTLA that "right now it looks like the cops have us surrounded on all sides." Another said a bucket of water was on hand to douse and dispose of any tear gas canisters that police may fire.
Earlier this week, the protesters sought a federal court injunction to block their removal.
Protesters say enforcement of the city's "anti-camping" provision is left up to the whim of the police.
The City Council has "expressly affirmed" that the demonstrators are within their First Amendment rights, their complaint said, and Mayor Antonio Villaraigosa, in ordering them to leave, overstepped his authority.
The protesters held their ground and rallied Monday, defying a 12:01 a.m deadline to disperse.
Villaraigosa announced the deadline Sunday night, saying "an encampment on City Hall grounds is simply not sustainable indefinitely."
Four people were arrested, but police pulled back.
The Occupy Wall Street movement that began in New York in September has spread across major cities worldwide as a call to action against unequal distribution of wealth.
In recent weeks, cities have begun clearing encampments, citing economic, health and public safety concerns.
The Los Angeles encampment, which has been in place for some 60 days, had become the largest remaining one after police raided New York's Zuccotti Park on November 15 and dismantled the nearly two-month-old camp.
Protesters there are still demonstrating but cannot remain in the park overnight.
Source: CNN