More than 1,000 people from Chadong Township in southern China's Guangdong Province gathered at the police station demanding the release of the villager Sunday, the Information Center for Human Rights and Democracy said.
He was arrested after fighting with the alleged gangsters.
The Hong Kong-based watchdog said the villagers damaged the police station and clashed with hundreds of riot police.
Tear gas was launched to disperse the crowd and the center said at least 20 people were hurt.
On Monday, a crowd blocked Highway 324 in the area and again clashed with police, leading to several arrests.
Protests at the police station continued in the following days as well and police had arrested more than 50 villagers by Friday, the center said.
A deleted article previously posted on a Chinese website co-managed by the provincial government and the outspoken Nanfang Daily, said the weeklong disarray stemmed from a financial dispute between locals and gangsters who were said to be collecting ''protection fees'' of 2,000 yuan ($292) per farm.
Hundreds of villagers fought with some 30 gangsters, killing one and injuring another, according to the article written by ''a Chadong villager.''
Police arrived and took away a few people, the article said, but about 1,000 villagers protested at the town government office and disrupted traffic after learning the arrested gangsters received more humane treatment by police than had the villagers, the article added.
It said public order had been restored and investigation of the case continued.
A spokesman, identified by surname Liu, of the Yunfu city government, which oversees Chadong, said the matter was a ''misunderstanding that has been resolved'' and no one was injured or prosecuted, but he declined to elaborate.
==Kyodo