Ivan Midgich, from the activist group We Are Dalarna, said that he and other clown-activists were convinced that humour was the most powerful weapon against extremists.
Angry people, they know how to meet anger, they know how to meet hate and violence but they don't know how to meet humour," he told Radio Sweden. "We could see they were very troubled by having us there."
Midgich said he had taken the idea from Finland, where activists dressed as clowns have in recent years come out to ridicule the anti-immigrant vigilante group Soldiers of Odin.
The march in Falun this year was organised by the extreme-right Nordic Resistance Movement.
The group is openly racist and anti-semitic. It is currently under investigation for displaying a symbol of a crossed-out Star of David on its website.
About 150 uniformed activists carrying riot shields bearing the group's logo led the march, followed by about 350 supporters.
The organisation had been given premission to march along a 2km stretch ending at Falun's main square, where they held speeches.
Local police said while the Nazis and counterdemonstrators had screamed violent insults at one another, there had been little in the way of violence at Monday's demonstration.
"There's been a bit of stone-throwing, but nothing serious, nothing which has come to anything," said Henrik Olars from the local police.
Last year a similar demonstration held in the nearby city of Borlänge sparked international headlines when a photograph of Tess Asplund, one of the counterdemonstrators raising her fist, went viral.