Hyderabad has a long history of Hindu-Muslim violence, with the previous major riot taking place in 1984.
Hindu activists have long alleged that the Babri mosque in Ayodhya was constructed after Muslims demolished a temple at the site.
Bharatiya Janata Party workers then attacked Majid Khan, an influential Muslim leader in the Sabzi Mandi area.
By 10 December, the Indian Army had taken control of the old city of Hyderabad, and more than 350 people had been detained in connection with the riots.
Chief Minister Marri Chenna Reddy, a member of the Indian National Congress, claimed that the riot had been engineered by his rivals in his own party, who wanted to oust him.