The march was organized on Martin Luther King Jr. Day by the National Association for the Advancement of Colored People (NAACP) to protest the continuing commemoration of the Confederate role in the Civil War.
Organizers said it was also to protest the threat of state education budget cuts, a proposal for a state identification card and talk of stricter immigration laws in South Carolina.
Linda Pearson, 61, of Columbia said she was proud to march on Martin Luther King Day.
"I come every year and I usually try to bring my grandchildren. It's still all about the flag, really," she said.
The Confederate flag hung from a flagpole atop the Capitol building until 2000, when it was moved to a monument to Confederate dead elsewhere on the grounds. The flag was moved only after an NAACP economic boycott of the state.
Dr. Lonnie Randolph Jr., president of the South Carolina State Conference of the NAACP, said the organization wants the flag completely removed from the grounds.
It also condemned South Carolina's ongoing commemoration of the sesquicentennial of the Civil War, which it views as celebrating slavery.
In December, the NAACP organized protest marches in Charleston around a "Secession Ball" that marked South Carolina's secession from the United States 150 years ago.
The ball was sponsored by the Sons of Confederate Veterans and featured period dress and the singing of "Dixie."
In an interview, Randolph said he was sure the United States would not allow a commemoration of the Wounded Knee incident in South Dakota, when Indians were killed by U.S. cavalry in December, 1890; or a party celebrating the dropping a nuclear bomb on Hiroshima; or a party celebrating the Holocaust in which millions of Jews died.
"They would not allow it and the NAACP is not going to allow South Carolina to do it," he said, referring to the state's commemorations of the Civil War.
South Carolina, in December 1860, was the first state to secede from the United States after the election of Abraham Lincoln, leading to the formation of the Confederacy.
The crowd listening to speeches after the march included the state's new attorney general, Alan Wilson, the son of Rep. Joe Wilson, Republican of South Carolina, who shocked a joint session of Congress in September, 2009, when he shouted "You lie!" at President Barack Obama as he spoke to Congress.
"I'm here to offer support as a private citizen," said Alan Wilson, also a Republican. "Our state has come a long way but we have a long way to go. We have got to look for common ground wherever we can."