CNN's Ian Lee said a "firefight" was going on around the ministry as protesters attempted to charge the building.
Lee said he had seen one protester shot in the head as police cordoned off the area and fired shots down side streets. At least five people died from gunshot wounds, according to a physician at a triage center in a Cairo mosque.
CNN's Frederick Pleitgen said the Interior Ministry building was a symbol of Egyptian President Hosni Mubarak's regime and had become a "flashpoint" for confrontations between protesters and security forces.
Earlier, tens of thousands of protesters were "losing their fear" and taking to the streets in unprecedented numbers, emboldened by rumors that Egyptian President Hosni Mubarak may soon step down, Pleitgen said.
Crowds marching past CNN's bureau in downtown Cairo held signs that said "Adios Mubarak" and "America it's time to do the right thing."
"Nothing short of a complete change is what they want, and there are no signs of them dispersing," said Pleitgen.
On streets where demonstrators had police clashed on Friday, protesters shook hands with soldiers and shouted "The people and the military, we are one."
"What we've seen from these crowds is an immense respect from the crowd for military members, unlike anything we saw before," said Pleitgen.
"If this was a line of police officers and not military members, then certainly you would have violence."
Thousands marching along the Corniche on the banks of the Nile towards Tahrir Square chanted "Down with Mubarak!" Others shouted "We are all Egyptians."
"There is a very, very large and peaceful movement throughout this country -- something that President Mubarak cannot shut his eyes to," said Pleitgen.
Protests in Alexandria mirrored those in Cairo, according to CNN's Nic Robertson, with up to 5,000 people marching through Egypt's second-largest city.
Families carrying their children and signs reading "Get out Mubarak" and "Saudi Arabia is waiting for you, you should leave" walked peacefully past soldiers.
"People are very concerned about what happens next, they're concerned about the violence," reported Robertson from Alexandria. "What we're seeing is an effort to maintain the momentum, but the volatility doesn't match what we saw on Friday."
**CNN's Frederik Pleitgen, Nic Robertson and Ian Lee contributed to this report.