One person died and seven others, including a police officer, were injured during a violent confrontation between traders in Narok Town on Sunday.
Tension was high since morning following the destruction of two markets.
Traders at Uhuru market protested its demolition, and out of rage they set Muthurwa market ablaze.
They said their properties were destroyed Saturday morning by people believed to have been sent by the county government.
"This market was given to the Maasai community members, specifically those women who used to do charcoal trade before it was banned by the same county government that has come to demolish it," Mr Joel Ole Seret, a shop owner, said.
Three people are feared to have been killed in running battles between police and the traders at Majengo estate.
Mr Seret said they were allocated the market after consultations with the county government's Lands executive, Mr Joseph Sasai, and Narok Town MCA Parsaloi Torome.
During a meeting with the traders, Narok North Sub-County Commissioner Ronald Mwiwawi said he was not aware of the order to demolish the market.
"We are yet to know where the orders came from. As the provincial administration we were not informed. We must embrace public participation by all levels of government to avoid such incidents," Mr Mwiwawi said.
The traders resolved to stop operations in other markets in the town and deny the regional administration revenue until their issues are resolved.
A trader, Grace Nakola, said she saw bulldozers pulling down the structures at midnight in the presence of security officers.
"They came with young men who raided and looted the stalls before they were demolished," she said.
The market was built under the Kenya Economic Stimulus Programme, a plan initiated by the national government to boost economic growth.
"The aim of this programme was to jump-start the Kenyan economy towards long term growth and development after the 2007/2008 post-election violence," Mr Lukas Kudate, a local leader, said.