
The protesters were fired on after they had streamed into the centre of the capital Manama from the funerals of protesters killed in a security crackdown earlier this week.
Witnesses said the army fired live rounds and tear gas, and officials said at least 25 people had been hurt.
Many of the protesters are calling for the overthrow of the royal family.
Crown Prince Sheikh Salman bin Hamad Al Khalifa appeared on state TV on Friday to promise a national dialogue once calm has returned.
The prince, who is also deputy supreme commander of the army, called for everyone to withdraw from the streets.
Emotional prayers
The BBC's Caroline Hawley, in Manama, says the funeral procession of one of the dead protesters turned into another anti-government demonstration.
The mourners were trying to make their way to the Salmaniya Hospital, where their injured colleagues are being treated.
But they passed close to Pearl Square, which has been sealed off by the army for the past day, and came under fire.
Our correspondent says it appears live rounds were used against the demonstrators.
An eyewitness told al-Jazeera TV that the authorities gave no warning.
"They just started shooting us. Now there is more than 20 injured in the hospital. One guy has already passed away because he got shot in his head," said the witness.
Witnesses told AP news agency that soldiers had fired anti-aircraft guns over the heads of the protesters as well as tear gas.
Medical officials say 25 people were wounded, but other reports from witnesses said many more had been hurt.
Bahrain is ruled by a royal family and a Sunni Muslim elite, but has a Shia majority who make up the bulk of the protesters.
Earlier, the country's most senior Shia cleric Sheikh Issa Qassem described attacks on protesters as a "massacre" and said the government had shut the door to dialogue.
As he spoke at emotionally charged Friday prayers in the Duraz neighbourhood, supporters shouted "victory for Islam", "death for Al Khalifa [the ruling family]" and "we are your soldiers".
Western countries have urged Bahrain to show restraint in dealing with protesters and called for meaningful reform in the small Gulf state kingdom.
The UN's rights chief Navi Pillay condemned the use of force by governments across the region, and singled out the Bahraini authorities for targeting medical workers while they were treating protesters.
"The nature and scope of the human rights violations taking place in several countries in the region in response to those who are largely demonstrating peacefully for their fundamental human rights and freedoms is alarming," she said.
source : bbc.co.uk