The MLAs, including six ministers, were detained for violating prohibitory orders around the 7 Race Course Road residence, a high security area.
The police, which asserted they would take action against anybody violating the law, detained them outside Race Course metro station and took them to the Parliament Street police station. They were released after some time.
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The AAP has 67 MLAs in the House of 70.
The latest confrontation between city government and the Centre was triggered over a complaint against Sisodia by the traders of Ghazipur market that he had threatened them. This came on the heels of the arrest of AAP MLA Dinesh Mohaniya on charges of molestation and sexual harassment on Saturday.
"I had just gone to tell Modiji to let us work for the people of Delhi. If you are fond of arresting us, then do it. Before they ask the police to arrest us, we said you have enmity against the MLAs. Arrest us. But, don't obstruct the work of Delhi," said Sisodia, who led the march.
After his release, he said, "We (AAP MLAs) all went together. If you (PM) want to do the politics of sending us to jail, then we will all come to you. Send us to jail together."
Earlier, Chief Minister Arvind Kejriwal tweeted, "Complaint filed against Manish Sisodia yesterday. Manish will go to 7, RCR today to surrender himself before PM." The decision to take out a march to the Prime Minister's residence was taken a meeting of legislators called by Kejriwal on this morning. It was attended even by Assembly speaker Ram Niwas Goel and his deputy, Rakhi Birla.
Union minister of state for home affairs Kiren Rijiju termed the act "a drama". He said the people of Delhi had given the AAP a mandate to work but Kejriwal was indulging in "theatrics".
Sisodia, while attacking Modi, referred to 14 Bills that have been returned by the Centre which said procedures were not followed in passing these legislations.
The Deputy Chief Minister had said yesterday that he had gone for a surprise inspection at Ghazipur Mandi where some people were running "illegal business" and they registered a complaint alleging that he had threatened them.
"I am sure that Modiji will tomorrow convert this complaint into accusations like violence, eve-teasing a girl and extortion and get me arrested," he had stated.
Talking about the incident, Special Commissioner of Police (North) S B K Singh said the president of Ghazipur Aadhti Association had given a letter at Ghazipur Police Station stating that Sisodia adopted a "dictatorial attitude" on hearing their grievances during his visit to the market.
"He (the complainant) was worried that Sisodia could get something wrong organised due to his position. However, no police action is made out in the matter," he said.
Sisodia said although the AAP MLAs were detained, he and his party colleagues were "ready to go to Tihar Jail".
Yesterday, he had tweeted, "Modiji, your enmity is with us. Arrest us. But do not stop the work of Delhi. We all are coming to surrender before you".
Justifying action against the MLAs, Special Commissioner of Police (New Delhi) M K Meena said, "we are not concerned with any party or any person holding whatever position. We will take action against whoever violates the law." Seeking to differentiate between the cases of arrest of Mohaniya and compliant against Sisodia, Special Commissioner (Law and Order) Taj Hassan said the complaint received against Sisodia "does not involve any cognizable offence".
In Mohaniya's case, Hasan said, complaint was cognizable, and the statement of the woman was also recorded in front of a magistrate and he was not joining the investigation.
Transport Minister Gopal Rai said the Modi government has give rise to an emergency like situation in Delhi and things are happening in a "planned manner to obstruct" the working of Delhi government.
"When a BJP MLA indulges in hooliganism, he is not arrested. There is no action against those whose name cropped up in the M M Khan murder case, but AAP is targeted," he said.
Rijiju said it is better not to react against Kejriwal's charges.
"We are so busy in running the country. The people have given us a chance to service the country. Arvind Kejriwal and his associates do drama all the time, the way he brings out things using theatrics? Does he have no work? "The people of Delhi have given them a mandate to work, but he is missing out on it and indulges in drama. If we start responding to every question of Kejriwal then we will have to stop working. PM is so busy. He is always thinking of what to do for the country. If we start acting like these dramebaaz then who will work for the country," Rijiju said.