In a video of the incident shared on social media, the independent senator can be seen lying on her back in front of the truck on Oxford Street during the Saturday night parade.
Two police officers then approach Senator Thorpe as the crowd begins to boo.
"Get rid of her! Get rid of her," a person in the crowd can be heard chanting during the incident.
She can then be seen getting to her feet and appearing to argue with police and Mardi Gras crew before she is accompanied from the street.
Senator Thorpe said she was proud to join the parade as part of the Pride In Protest float in a social media post on Sunday.
"Black and brown trans women started the first pride march as a protest against police violence. Today, we still face violence from police," she wrote on Twitter.
NSW Police told AAP a woman had temporarily blocked the progress of the parade after lying on Oxford St in front of a float at about 9pm.
"She was later removed from the parade at the request of organisers for breaching the terms of her participation," a spokesperson said.
A spokesman for Sydney Mardi Gras confirmed the parade had been interrupted by Senator Thorpe as she attempted to stage a protest.
"While we respect the individual's right to protest, interrupting the parade in this way has significant implications for the safety of our participants and audience," the spokesman said.
AAP has contacted the office of Senator Thorpe for comment.
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