An estimated 300 demonstrators, accompanied by samba band Crooked Rhythm, gathered at the Watermark Centre before heading to the town centre waving placards.
Waste company Viridor wants to build an incinerator and landfill site at New England Quarry, near Lee Mill. The plans are opposed by a number of groups which united to organise Saturday's demonstration.
Frankie Dolan, who founded the website ecoIvy.org, said those against the incinerator favoured alternatives such as investment in recycling, increased kerbside collection, composting, mechanical biological treatment (MBT), and anaerobic digestion.
She said the demonstration had a fantastic turnout, at short notice and on an important shopping day before Christmas. "Many had never demonstrated in their lives," she said. "All ages, from little children to pensioners came out today.
"We don't think the incinerator is the right technology for Devon; we don't want it anywhere. We believe there are much better alternatives.
"Waste is the resource of the future. We shouldn't be burning it; it would undermine our recycling efforts and pose a health and pollution risk. There's no quick fix; it requires effort from everybody. If there is a lot of investment in recycling, it would really stimulate the economy."
Stephen Mosbacher, of Friends of the Earth, said: "It's an old-fashioned technology, the finances don't stack up, it's bad for our health, it's bad for climate change and it's going to reduce the value of the area.
"I'm concerned for my own health but I also oppose the one planned in Ernesettle. I'm against any incinerator. I can't understand why Devon wants to use one when London and Surrey have decided not to."
The South West Devon Waste Partnership is considering plans by three waste companies – MVV Umwelt, SITA UK and Viridor – to build a £100million incinerator at one of four sites: New England Quarry, Ernesettle, South Yard and North Yard at Devonport.
The incinerator would handle all remaining domestic rubbish from Plymouth, Torbay and South Devon after recycling had taken place.
Viridor says its plan would provide jobs and could produce enough energy to power around 45,000 homes, and it will go ahead with the facility at New England Quarry even if it is not chosen by the Waste Partnership and hopes to submit a planning application to Devon County Council this month.
Final tenders will be invited late next year, and the incinerator contract will be awarded in 2011.