Five pro-independence candidates who tried to register were rejected by election officials who said their stance went against Hong Kong's mini-constitution.
Critics have slammed the move as censorship as fears grow over Beijing interference in the semi-autonomous city in a range of areas, from politics to media and education.
The candidates and their supporters are due to rally near the government's headquarters later today.
Andy Chan, 25, leader of the pro-independence Hong Kong National Party and a disqualified candidate, said the rally would be peaceful, focusing on the future aims of the movement.
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Pro-independence activists have previously advocated violence as a way to get their message across but Chan steered away from that rhetoric.
High-profile campaigner Edward Leung, a philosophy student, will also attend the rally after being banned from the vote this week.
The idea of independence is dismissed as illegal by Beijing and Hong Kong authorities, and was a taboo subject until recent months, when new parties emerged campaigning for a breakaway.
Localist groups are pushing for more autonomy for Hong Kong and characterise it as culturally separate from the mainland.
Some localists do not advocate independence, but are instead pushing for self-determination for Hong Kong, an idea which has taken root among other pro-democracy campaigners.
Demosisto, a new party set up by Umbrella Movement activists including well-known campaigner Joshua Wong, has made self-determination its central platform, although it does not cast itself as a localist organisation.
Activists supporting a complete break from the mainland have been barred.
"It seems that they are now punishing people for having certain opinions which they don't agree with. It undermines the rule of law in Hong Kong and makes people feel they are losing their freedoms," veteran politician Emily Lau, chairwoman of the Democratic Party, told AFP.
Thirty leading lawyers also came out against the move.
However, Jasper Tsang, the outgoing president of the city's legislature, insisted it was legal.
"The government and people from all walks of life don't want to see the election becoming a stage for promoting Hong Kong independence," he told reporters.