Around five people were injured as rioters hurled stones at a Muslim teashop and surrounding buildings last night, said Lieutenant Colonel Zaw Min Oo of Mandalay region police.
"We fired three warning shots to control the crowd," he told AFP, adding that the situation was calm this morning, with an increased security presence in the area.
Myanmar has been convulsed by several waves of sectarian conflict in recent years that have cast a shadow over its emergence from military rule.
"The shop owners were accused of rape a few days ago. The violence started after those accusations were spread and created religious tension," he said.
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One Muslim resident in Mandalay said the mob swelled into the hundreds as police struggled to contain the unrest yesterday.
Attacks against Muslims -- who make up at least four percent of the population -- have exposed deep rifts in Myanmar.
Hardline monk Wirathu posted a link to online allegations against the teashop owners on his Facebook page just hours before the unrest sparked.
The cleric is part of a radical wing of the Buddhist clergy that has been accused of stoking sectarian tensions with fiery warnings that Buddhism is under threat from Islam.
The radical Buddhists have proposed boycotts of Muslim businesses and supported controversial curbs on religious freedoms that are now being considered by the government.