Thousands of activists gathered at the North Carolina legislature on Monday as it reconvened for the first time since enacting a law criticised as anti-gay.
Supporters and opponents of the bill held competing rallies outside the statehouse in Raleigh.
More than 50 critics of the legislation were arrested after entering and refusing to leave the building.
The controversial law invalidates local anti-discrimination measures that protected gay and transgender people.
It also requires people to use public toilets that correspond to the sex listed on their birth certificates.
Major companies such as Bank of America and Apple have criticised the law.
Other companies including Pay Pal and Deutsche Bank vowed to curtail their businesses in the state because of it.
"It took great courage for them to establish this bill," Doug Woods, 82, a supporter told the Associated Press. "They need to stand firm."
"It would not undo with the swipe of a pen the incredible damage that House Bill 2 has done to our economy," Democratic lawmaker Grier Martin said of a repeal.
"But it would stop the bleeding and put North Carolina back on the path of progress and moving forward."
The legislators met for a brief session on Monday evening but soon adjourned, to the annoyance of critics of the bill.
Arrests were made as the protesters refused to leave the building when it closed for the night.
In response to the backlash, North Carolina Governor Pat McCrory has made small adjustments to the law, but he said restrictions on the use of public toilets would remain.
Business groups and gay rights activists said Mr McCrory's adjustments were not enough.
Also on Monday, pop singers Demi Lovato and Nick Jonas cancelled forthcoming shows to protest against the law, joining dozens of other entertainers including Bruce Springsteen and Pearl Jam.
Some supporters of the law said allowing transgender people to choose their restroom could lead to women and children being attacked.
They said they feared that men could pose as transgender people and use legal protections as a cover.