More than 100 people were outside the town's library on Tuesday, where drag queen performers Erika and CoCo Flash hosted an R16 event which includes storytelling, lip synching, singing and an interactive performance.
Rainbow community supporters stood face-to-face with protesters as police de-escalated tensions between the crowd before any fights arose.
On Monday night, Destiny Church members painted over a rainbow crossing, a move Gisborne mayor Rehette Stoltz said the council condemned.
"We accept that people hold different views however there is no place for hate or bigotry in Tai Rāwhiti," she said.
Labour Party rainbow spokesperson Shanan Halbert told Morning Report on Wednesday the behaviour shown by Destiny Church was "very disappointing" and his heart went out to the entertainers as well as young people in the rainbow community.
He supported people's right to protest but said: "What we are seeing is vicious discrimination against young people and their families."
Entertainers were being labelled sex workers when they were not and people were "shouting paedophilia" and painting over a crossing that was part of the rainbow community's identity.
It was important young people and their whānau felt safe in their community, and Halbert called on the government to show leadership and take action.
"This is challenging. What we see is rainbow young people over-represented in mental health statistics and so the government really has a duty of care in this sense to step up."
Halbert was critical about the government's plan to remove sexuality guidelines for schools - saying they were a tool to help young people, and said it needed to show the same kind of intolerance for hate crimes as it did for gangs.
Halbert said Gisborne's mayor, iwi, police and other groups had spoken out and shown support for the rainbow community but "we've actually had nothing from this government".
Minister of Justice Paul Goldsmith said vandalism was never justified, regardless of peoples' beliefs.
Halbert said the government was working to remove hate speech laws but Goldsmith said there was no plans to remove existing protections in the law related to hate speech.
"But we opposed and will not continue Labour's proposed hate speech laws, because they would have undermined free speech.
"I have been very clear that work on hate crimes law will proceed, as it is extremely important we make sure all of our communities in New Zealand are protected and are safe.
Goldsmith said he could not comment on the removal of sexuality guidelines in schools.
Following the protest outside Gisborne's library, Hastings District Council cancelled its own upcoming Rainbow Storytime event.
Mayor Sandra Hazlehurst said she was deeply disappointed the council had to make the call to cancel the event.
"We had every intention of standing up to this intimidation and going ahead, but unfortunately the potential for there to be possibly aggressive protests outside the library is something we can't subject our children and the rest of the community to," she said.
Goldsmith said he was unable to comment on the operational decision of the library in cancelling the event.
RNZ
