Populist Iraqi cleric Moqtada Al Sadr on Sunday ordered his followers to help security troops clear roads blocked by protesters.
Mr Al Sadr withdrew support for months-long anti-government demonstrations after the appointment of a new prime minister.
He also urged his supporters to work with authorities to ensure schools and businesses could operate normally again.
"I advise the security forces to stop anyone from cutting off roads and the ministry of education should punish those who obstruct regular working hours, be they students, teachers or others," Mr Al Sadr said on Twitter.
His supporters swarmed into the main protest site in Baghdad soon after President Barham Salih nominated the politician Mohammed Allawi as Prime Minister on Saturday evening
Hundreds of men in the blue caps worn to show allegiance to Mr Al Sadr entered Tahrir Square and the abandoned building on its edge known as the Turkish Restaurant.
The building had become a symbol of the popular uprising against Iraq’s political class since it began in early October.
The protesters accuse the leaders of corruption and failing to deliver basic services, and are demanding elections under a new electoral law and an end to foreign influence in Iraqi politics, which is dominated by Iran-backed groups.
Protesters said the Sadrists’ seizure of the building was to prevent them from expressing their rejection of Mr Allawi, a former communications minister and two-time member of Parliament.
“The fact is that Mohammed Allawi is supported by Al Sadr and the rest of the parties,” said Ali Al Mikdam, 21, who has been taking part in the protests since they began.
“The Sadrists took control of the building by force, using batons. They also searched all of the protesters' tents. In addition, they threatened everyone who opposes or disagrees with them.”
The protesters’ occupation of the Turkish Restaurant had a symbolic and strategic value as it looks over Tahrir Square and the Jumhuriya bridge, which leads into Baghdad’s high security Green Zone where government offices and embassies are located.
“They took it by force,” said "Abbas", a protest organiser.
Abbas had helped to set up a library in the building and a photo gallery of some of the nearly 500 protesters killed in Baghdad and in southern cities such as Basra and Nasiriyah since October.
"If I went back to the restaurant they would kill me," he told The National.
Mr Al Sadr, an influential cleric who has mobilised his own street protests in the past, changed his position on the anti-government uprising several times in the past week.
Some protesters chanted against him after he called for a million-man march against the US troop presence in Iraq on January 24.
He then withdrew his support from the protests, causing many Sadrists who had taken part in the sit-in to pack up their tents and leave Tahrir Square.
Their withdrawal was followed by a sharp rise in violence against the protesters. Mr Al Sadr then called for his supporters to return to the square on Friday.
“How can you trust someone who changes his mind all the time?” Mr Al Mikdam said.
Protesters said Mr Al Sadr's latest statement had created a tense atmosphere in the square, but there was no noticeable drop in their numbers.
On Saturday night, Sadrists standing outside the Turkish Restaurant said they were occupying the building for the “safety” of protesters, claiming they had heard reports of alcohol, drugs and weapons inside the building.
"We're here to ensure the protests remain peaceful. Nothing more or less," Al Sadr supporter Rahman Mohamed told The National.
As he spoke, others began throwing protesters’ belongings from the upper floors.
“They might have knives or bombs,” Mr Mohamed said.
The Sadrists also removed protest banners and posters of slain protesters that had been hung outside the building.
Many of the men in blue caps held walkie-talkies and metal or wooden batons. When asked why he was carrying a metal rod, one said: “Just to scare them.”
Despite the presence of the Sadrists, protesters made clear their opposition to Mr Allawi.
They scattered his posters on the ground, trampling on them and driving over them with tuk-tuks.
Young men gathered together to chant, “Allawi is refused, Allawi is refused” while holding posters with a red cross over his face.
“We do not want Mohammed Allawi at all,” said Mohammed Ali, 18, standing next to a friend who was burning a poster. “We do not want the corrupt. We want them to leave.”
Murtada Sabaa, another protester, said: “We want a prime minister but one that will make a good change and who understands the people.
“He is supported by the Iranians. We want a free country without Americans, without foreigners governing us.”
Demonstrators in Tahrir Square have said giving up control of the Turkish Restaurant would mean the end of the protests, but Mr Al Mikdam said he was not willing to stop.
“For four months in Tahrir I’ve only eaten beans," he said. "The rain cleaned my clothes. I’ve lost a lot of friends. I’m not ready to lose what happened here."
But as he watched another group of men in blue caps march into the square brandishing metal rods, he seemed less certain.
“The revolution is in Nasiriyah now,” he said. “There are too many militias here in Baghdad.”