The suicide note, purportedly written by V Santosh, the student, said he was ending his life for Telangana state, police said.
Santosh, who was studying at a college in Tukkuguda on the city outskirts, committed suicide by hanging himself from a tree in front of Arts College on the Osmania University campus.
As news spread, a large number of students gathered and started shouting pro-Telangana slogans. Tension increased when they opposed shifting of the body for autopsy.
The students wanted to take out funeral procession to Gun Park near the Assembly complex, but police denied the permission.
Police had to use teargas to bring the situation under control, an officer said.
BJP condemned the use of teargas by police in a statement here.