Pictures from the protests last night showed white supremacists holding torches in the air and chanting slogans such as "one people, one nation, end immigration" as they clashed with anti-fascism protesters.
A major rally by various white nationalist groups - under the name "Unite the Right" - is planned for Charlottesville today.
A hospital official said one person has died and 19 were injured after a auto plowed into a group of protesters in Charlottesville.
It was not immediately clear if the collision was intentional.
The National Guard is on standby, with Virginia State Police coordinating security in the city of 45,000, the governor said in a statement on Friday. The city's manager also declared a local emergency and police ordered people to disperse from the area around the statue, according to The Associated Press.
Right-wing protesters clashed with counter-demonstrators before the "Unite the Right" rally against plans to remove a statue honouring Confederate general Robert E Lee from a Charlottesville park.
After fights broke out, police dispersed the crowd, claiming it was an unlawful assembly, Richmond's WTRV-TV reported.
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McAuliffe, a Democrat, said numerous people at the rally will "express viewpoints many people, including me, find abhorrent".
Washington, Aug 12 Violent clashes today erupted between white supremacists and counter demonstrators in a rally in the USA state of Virginia, prompting the authorities to declare an emergency.
"That's what we believed in, that's why we voted for Donald Trump, because he said he's going to take our country back, and that's what we've got to do".
For many Americans, they are outdated symbols of racism, and have been mobilizing to have them taken down from public places.
More than 100 white nationalists, neo-Confederates, and alt-right activists marched with Tiki torches through the university's lawn and the Rotunda. She said some injuries had been reported. And finally, this is about free speech.
Thousands of demonstrators and counter-protesters are expected to rally Saturday afternoon at Emancipation Park, formerly Lee Park, where several white nationalist groups are hosting a "Unite the Right" rally.
"As the former mayor of this handsome, inclusive and progressive community, I am saddened that our city may draw thousands who would come here to sow division and hate", House Democratic Leader David Toscano said. Victor Glasberg, Kessler's attorney, noted the city did not ask for counter-protests planned in Justice Park and McGuffey Parks to be moved.