An AFP reporter on the scene estimated several thousand protesters took to the streets of Manokwari, the capital of West Papua province, bringing the city of some 130,000 to a standstill.
Some demonstrators also set fire to shops and vehicles, knocked down street signs, and threw rocks at government buildings.
"The parliament building has been set on fire," West Papua deputy governor Mohamad Lakotani told Kompas TV.
"Downtown, markets, the port and shops are all affected. All activities are basically paralysed," he added.
Three police officers were injured by rock-throwing protesters, police said. It was not immediately clear if any demonstrators were injured.
Authorities closed local schools for the day.
Papua, which has been the scene of a decades-long insurgency against Indonesian rule, shares a border with independent Papua New Guinea (PNG), just north of Australia.
A former Dutch colony, Papua declared itself independent in 1961, but neighbouring Indonesia took control of the resource-rich region following a UN-sponsored independence referendum that was widely viewed as a sham.
Monday's riots were triggered by reports that authorities tear-gassed and detained some 43 Papuan university students in the Southeast Asian nation's second-biggest city Surabaya on Saturday -- Indonesia's independence day.
Local media and Papuan activists said police in riot gear stormed into a dormitory and used tear gas in a bid to force out students who allegedly destroyed an Indonesian flag.
National Police spokesman Dedi Prasetyo did not deny reports that police used tear gas, but said the students in Surabaya were only "questioned" briefly before being set free.
Television footage on Saturday also showed a different group of protesters demonstrating against the students and shouting racial slurs about Papuans.
Indonesia routinely blames separatists for violence in Papua and conflicting accounts are common.
The country's security forces have for years been dogged by allegations of widespread rights abuses against Papua's ethnic Melanesian population including extrajudicial killings of activists and peaceful protestors.
Hundreds also protested in Jayapura, the region's biggest city, on Monday.