Some demonstrators waved flags or brandished banners calling for Babis to step down and chanted "shame!" and "resign!".
Czech police tweeted there were "more than 200,000 people while others are still coming" to the protest at Letna park in central Prague.
The mass protest comes on the eve of the 30th anniversary of the Velvet Revolution, which saw unprecedented protests and a general strike end four decades of Soviet-imposed totalitarianism in what was then Czechoslovakia.
A former communist, the populist Babis faces a string of graft allegations and a conflict-of-interest probe by the European Commission centred on Agrofert, his sprawling farming, media and chemicals holding. Babis has denied any wrongdoing.
He is also tagged as an agent in secret police files from the 1980s, something he has completely rejected.
"I really don't like our prime minister's lies," protester Josef Plandor, who travelled from the eastern Czech village of Zasova, told AFP.
"His huge conflict of interest, his lies, fraud, there's too much of that. He's not an honest man," said the 43-year-old forestry worker, adding that he was "sure" Babis would never quit.
The Million Moments for Democracy movement, which organised the protest, called on Babis to either resolve his conflict of interest or step down.
Some 250,000 people rallied in Prague in June demanding Babis step down in the largest protest since the Velvet Revolution.
His minority coalition government is propped up by the Communist Party in parliament.