Etape Cymru followed a 100-mile (161km) route through Wrexham and Denbighshire, and was only the second fully-closed road event in the UK.
Sunday's event started and finished in Wrexham, with entrants climbing 6,000ft (1,828m) en route through Denbighshire.
Organisers have apologised for any inconvenience after some local people criticised the road closures.
British Cycling, the governing body of cycle sport in the UK, says it is the UK's second fully-closed road event: the other is Scotland's Etape Caledonia, which is estimated to generate up to Â£1.8m for the local economy.
The challenge included climbs such as the Horseshoe Pass, The Shelf, The Garth and Worlds End.
There was also a Horseshoe Pass Challenge, where cyclists were invited to see how quickly they could travel the 3.8-mile (6.1km) climb, which gains 1,040ft (317m) in height and reaches gradients of up to 20%.
Gareth Morris, of event organisers K-Extreme, said 1,600 entries was "fabulous for a first year event" with people coming from all "over the UK, as well as southern Ireland and Spain".
Mr Morris said the event would provide an economic boost for the area.
There are already plans to stage it again next September, when it is hoped even more entrants will apply.
Wrexham and Denbighshire councils have worked closely with K-Extreme, and agreed to close roads on the route for the event, which began at 08:00 BST.
However, some residents have complained the closures were not widely publicised and claim they will inconvenience people.
One resident, from the Minera area of Wrexham, claimed several local people had not heard of the race until a few days ago.
Mr Morris, of K-Extreme, said the organisers had worked with Wrexham and Denbighshire councils for 11 months, and a "large-scale consultation process" had been undertaken, as well as thousands of letters being distributed to residents.
However, he added: "It's a closed road event, so it's going to cause disruption.
"We can only apologise for that. It's our first year and we and the councils will quickly learn from this and look at the concerns, to see how we can address them."
The challenge was initially described as a race, but organisers later confirmed it had changed to "a challenge" to ensure compliance with insurance regulations.
About 1,600 cyclists have taken part in Wales' first closed road bike challenge.