The JKLF chairman had led a rally from party headquarters at Maisuma shortly after Friday prayers but they were intercepted by police at nearby Budshah Chowk in the heart of the city.
However, after they resisted, police detained Malik and other leaders of the outfit, they said.
Earlier, Malik said that his party has organised the rally to ask India and Pakistan to resolve the Kashmir issue in accordance with the wishes and aspirations of the people of the state.
"It will be a historic blunder if Kashmir issue is ignored by the two countries in the foreign secretary level talks scheduled in Islamabad. Kashmir issue is the bone of contention between the two countries and needs immediate resolution for everlasting peace in the region," he said.
JKLF had announced a plan to organise the rally coinciding with external affairs minister SM Krishna's three-day visit to Pakistan to carry forward the ongoing dialogue process.