The country's top appeals court also joined protesters, saying that it would go on strike until Mursi withdraws the controversial decree.
Court of Cassation said it would "suspend all work until the constitutional declaration issued by President Mursi last Thursday is rescinded."
Egypt's top constitutional court also said "there was a plot to infringe upon its authority and independence".
The protests came after Mursi held a meeting with the nation's top judges to defuse the crisis over the controversial decree, but the meeting failed to break the impasse as thousands of people poured onto the streets in a massive show of defiance.
Police fired tear gas into Tahrir Square, where several hundred protesters spent the night after a mass rally to denounce Mursi.
The huge turnout at the square and several cities across Egypt marked the largest mobilisation against Islamist President Mursi who took office in June. Supporters of the former Hosni Mubarak regime also joined the protests.
Meanwhile, Mursi held consultations with people in his constituency and there was no sign that he is considering the option of retracting his decree.
Mursi's chief of staff Mohamed Refaa al-Tahtawi insisted that he will not go back on the recent declaration. (MORE)