At least 23 people were arrested.
Violence erupted overnight as food and hygiene inspectors tried to remove vendors from the junction of Portland Street and Shan Tung Street.
Angry protesters threw bricks and other missiles at police.
Police used batons and pepper spray and fired two warning shots into the air. At least 44 people, including police and journalists, were injured.
Hong Kong’s Chief Executive CY Leung has condemned the unrest, saying Hong Kong “can never tolerate that and the police will spare no effort to arrest the rioters”.
It is the largest unrest in Hong Kong since the massive pro-democracy street protests in 2014.
Street stalls are common in the Mong Kok area year-round, but particularly during the New Year holiday, where they are popular with locals for selling traditional New Year snacks.
Ahead of the clearance operation, hundreds of people had gathered in the area to defend the hawkers.
Police said the vendors and activists were told to leave but ignored the warnings.
Clashes then broke out in the early hours, and carried on past dawn..
Among the protesters were reportedly some “localist” – anti-Beijing – groups.
One of them was arrested, CY Leung said.
Acting District Commander Yau Siu-kei confirmed reports that an officer had fired two warning shots into the air. He said the officer had to act protect colleagues, the South China Morning Post said.
The unrest was widely referenced on social media, where it was dubbed #fishballrevolution after one of the food delicacies sold by the hawkers.
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