About 700 people gathered on the street in the Short Strand area and were causing "serious disorder", throwing fireworks, gasoline bombs and other missiles, police said, adding that there were reports two men had sustained burn injuries.
Journalists were warned away from the area after a press photographer was reportedly shot in the leg during the violence.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
Roads in the area were closed and police were working to restore order.
British broadcasters showed video in which groups of hooded and masked men pelted each other with stones and missiles, and many attacked police vans.
The BBC said large numbers of police were on standby with water cannons.
Violence first flared on Monday night in Short Strand, a small Catholic community in a predominantly Protestant area of Belfast.
About 500 people were involved in the street riots, which began when masked members of the Ulster Volunteer Force - a paramilitary Protestant group - attacked homes with bricks, fireworks and smoke bombs, police said.
Shots were fired from both sides, though two bullet marks on a police car were blamed on the UVF, which claimed to have disarmed fully in 2009. Two men were being treated for gunshot wounds to the leg, police said.
Catholic leaders said the violence was unprovoked, but Protestant leaders said the Protestant mob appeared to be retaliating for smaller-scale attacks by Short Strand youths on Protestant homes the night before.
Northern Ireland First Minister Peter Robinson condemned the riot, which came as a separate bomb attack from dissident republicans targeted police in west Belfast early on Tuesday.
The area affected by the rioting was one of more than 30 parts of Belfast where high barricades separate Irish Catholic and British Protestant turf.
Such barricades, called "peace lines" locally, have grown in number and size, despite the success of Northern Ireland's 1998 peace accord.
Sectarian tensions typically flare in the build-up to July 12, a divisive holiday when tens of thousands of Protestants from the Orange Order brotherhood march across Northern Ireland.
