Sadr supporters in deadly crackdown against protesters in Iraq's holy city of Najaf
It marked the bloodiest episode yet in the escalating tensions between Sadr - a cleric and politician who also leads the "Peace Brigades" militia - and protesters who have demanded the departure of Iraq's ruling elite since October.
Sadr initially backed the demonstrations but split with them suddenly this weekend, endorsing Mohammad Allawi as the country's new prime minister designate.
The core protest movement sees Allawi, a 65-year-old ex-minister, as being too close to the political elite.
Tensions between the two camps have already boiled over, with Sadr supporters - typically identified by their blue caps - storming squares and harassing protesters, who have taken up chants against the cleric.
On Wednesday, Sadr supporters flooded the main anti-regime tent city in Najaf, witnesses said, and clashes erupted before security forces intervened to separate the two sides.
The Sadr supporters insisted on searching the tents for Molotov cocktails and alcoholic drinks but the protesters prevented them and the situation escalated when they chanted slogans against Muqtada Sadr and his intervention in the popular movement," protester Ali Hujaimi told The New Arab's Arabic-language service.
He said that the Sadr supporters then started beating protesters, resulting in the two sides throwing rocks at each other. The blue-capped Sadr supporters then attacked the protesters with pistols and machine guns.
Seven anti-government demonstrators were killed by bullets to the head or chest, medics in the city said. Four other protesters later died in hospital and at least 85 others were injured.
Tents in Najaf's Sadrein Square, where protesters had slept for weeks as part of their sit-ins, were also set alight.
A doctor told The New Arab’s Arabic-language service that many people were critically injured and that the death toll could rise still.
The New Arab's correspondent in Najaf said that one of the victims was due to be married next week. All of those killed were aged between 16 and 32.
On Thursday morning, security forces were deployed across Najaf to prevent further violence and Iraqi interior minister Yassin Al-Yaseri arrived in the city late on Wednesday night to meet with security chiefs.
Iraqi PM-designate Allawi held the outgoing government of Prime Minister Adel Abdel Mahdi responsible for the safety of protesters.
"The painful events happening now lead me to request the brothers in the current government to do their duty to protect protesters, until a government is formed which will fulfil the hopes of all Iraqis," he said on Twitter.
Allawi met on Wednesday with protest leaders and offered them cabinet posts in a planned new government.
However, the Iraqi security forces did not arrest any of the Sadr supporters involved in the deadly violence against the protesters. Activists said that the violence would not deter them from continuing with anti-government protests.
"Protesters are trying to gather this [Thursday] morning and organise a demonstration in [Sadrein] Square against the violence they were exposed to," an activist who withheld his name told The New Arab's Arabic service.
He said that he was shocked that security forces had not arrested any Sadr supporters.
"It's very sad to see guys get killed under the nose of security forces who just played the role of the bystander," another protester, Mohammed Hussein, told AFP.
In the Iraqi capital Baghdad, hundreds of protesters demonstrated in Tahrir Square against the killing of protesters in Najaf.
They blamed the government for the violence and called on the international community to prevent any further attacks. Other major protest took place in Nasiriyah and the Shia holy city of Karbala.
Agencies contributed to this report.