Armed drug gangs have closed down large parts of Rio, casting a cloud over its world-famous carnival celebrations by burning buses, attacking police posts, throwing bombs in middle-class areas and demanding that shops shut or face retaliation.
The violence comes as record numbers of tourists arrive in Brazil's main city to take part in the celebrations beginning this weekend.
Several people were injured, two seriously, on Monday during what is the second wave of terror orchestrated across the city by the gangs, which have released an "official statement" to the public.
Businesses closed in more than 20 neighbourhoods, including Cidade de Deus - the favela shantytown of the hit film City of God - because of the gangs' threats.
The film, which won a Bafta on Sunday for best editing, tells the story of how favelas became controlled by drug factions. It has brought Rio's urban violence to an international audience for the first time.
The city is expecting 380,000 tourists for the carnival, a record number helped by the low value of Brazil's currency, the real.
"Hotels are packed like never before, and this [violence] certainly will have a negative impact on the city's tourism image," Cesar Maia, the city's mayor, said.
In their statement, signed by the Red Command faction, the drug gangs criticised "oppressive and cowardly" policing of favelas and accused politicians of violence against the poor.
However, some experts dismissed the sending of the communique as a farce, saying the politicised language disguised the drug gangs' real intentions which are financial. Others suggested that the "shutdown" was in response to police actions against the gangs, a protest at prison conditions or even just a show of force.
Around 11,000 young men, about half of whom are under 18, belong to Rio's drug gangs. Based in favelas, they have heavier weapons than the police.
The authorities knew late on Sunday that the gangs had something planned, but were powerless to stop events unfolding. Early the next morning three handmade bombs were thrown at buildings in Ipanema, which during the day is home to one of Rio's busiest tourist beaches.
During the morning rush-hour, two petrol bombs were thrown into a packed bus in another middle-class area, injuring 13 people, two seriously. Another 24 buses were burned out and a further 13 vandalised or shot at during the day.
More than 10% city schools were affected, with classes cancelled for fear of violence.
The Red Command is headed by Brazil's most notorious drug boss, Luiz Fernando da Costa, who is in a jail on the outskirts of Rio.
The state security secretary, Josias Quintal, said the group's aim was to create "a wave of terror and climate of instability", but dismissed it as a "desperate attempt" by drug traffickers to retaliate for tough police action against them. "There will be a response, police are on the streets," he said.
About 30 people were arrested, police said.
The mayor said beefed-up police units would guarantee that the carnival would be peaceful. But he said the violence was marring Rio's image. "It is lamentable that this happens when we have a record number of tourists," he said.
Hotels advised tourists to be careful in the streets but the warning did not keep them away from Rio's beaches. An Argentinian doctor, Hector Demeri, was reading a newspaper at a stand in Ipanema, near where a bomb exploded.
"I don't see more risk here than in Buenos Aires or in Bogota ... If you're from Latin America you don't care about these things," he said. "But if you're European, you might actually get scared."
