A huge demonstration is unfolding about a mile away from the Dolby Theater in Hollywood Sunday -- at none other than the Dome Entertainment Centre, in fact -- where hundreds of people gathered with signage, megaphones and Palestinian flags ... while up in arms.

Of course, this is a pro-Palestine protest -- one that's been organized by groups like Writers Against the War on Gaza LA, Film Workers for Palestine, SAG-AFTRA Members for Ceasefire and others ... with their main message being, "No awards during a genocide!"

Another tagline being used for this protest ... "While You're Watching Bombs Are Dropping."

It goes without saying ... these folks are protesting against the ongoing war in the Middle East -- this as Gaza continues to be under siege as Israel seeks to eradicate Hamas.

As you can see ... tensions were high here, as people chanted and made their voices heard ahead of the biggest night in Hollywood. The Oscars are just about an hour from starting.

Unfortunately for these demonstrators, they won't be getting much closer to the actual Oscars venue itself -- the Dolby Theater is blocked off by cops, who've set a wide perimeter ... and who are standing guard with their riot gear ready to go in case things escalate.

Meanwhile ... the stars are getting ready for the big show -- lots of red-carpet arrivals are happening right now ... and they don't seem too worried about the ruckus up the block.