Around five people were injured as rioters hurled stones at a Muslim teashop and surrounding buildings on Tuesday night, said Lt Col 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 on Wednesday 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.
A senior police official who did not want to be named told AFP that the Mandalay rioters, who were armed with knives and stones, had been spurred on by claims against people from the teashop.
"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.
One Muslim resident in Mandalay said the mob swelled into the hundreds as police struggled to contain the unrest late Tuesday.
Attacks against Muslims — who make up at least 4% of the population — have exposed deep rifts in Myanmar.
At least 250 people have been killed and tens of thousands left homeless since 2012 by inter-communal violence that has largely targeted Muslims and has often been provoked by rumours or individual criminal acts.
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.