The march called by prominent Shia cleric Muqtada al Sadr aims to pressure Washington to pull out its troops.
Two Iraqi protesters were killed and several dozen wounded on Friday while attending an anti-government rally in the capital Baghdad, medical and police source told AFP.
One was shot by a live round in his neck and the second was hit with a military-grade tear gas canister, the sources said.
The violence came hours after thousands held an anti-US rally in the capital, which passed without incident.
Earlier, thousands of Iraqis rallied at two central Baghdad intersections on Friday after a prominent cleric called for a "million-strong" protest against American military presence in the country, following the US killing of an Iranian general and an Iraqi militia chief.
The march, called by Muqtada al Sadr, aims to pressure Washington to pull out its troops, but many anti-government protesters fear it could overshadow their separate, months-long demonstrations that have challenged Iran-backed Shia groups' grip on power.
Tahrir square avoided
Sadr opposes all foreign interference in Iraq but has recently aligned himself more closely with Iran, whose allies have dominated state institutions since the US-led invasion of Iraq in 2003.
Throngs of marchers started gathering early on Friday at al Hurriya Square in central Baghdad and near around the city's main university, Reuters witnesses said. Marchers avoided Tahrir square, a symbol of mass protests against Iraq' ruling elites.
"We want them all out – America, Israel and the corrupt politicians in government," said Raed Abu Zahra, a health ministry worker from southern city of Samawa, who arrived by bus at night and stayed in Sadr City, a sprawling district of Baghdad controlled by the cleric's followers.
"We support the protests in Tahrir as well, but understand why Sadr held this protest here so it doesn't take attention from theirs," he added.
Men and women marched waving the red, white and black national colours, and chanted slogans against the United States, which leads a military coalition against the Daesh militants in Iraq and Syria.
'Do not cross this barrier'
Some were wearing symbolic white robes indicating they're willing to die for their country while others sat looking out over the square from half-finished buildings, holding signs reading "No, no, America, no, no, Israel, no, no, colonialists".
Marchers were protected by Sadr's Saraya al Salam brigades and Iraq's Popular Mobilisation Units, an umbrella grouping of Iran-backed Shia militias, witnesses said.
It is unclear if the march will end up at the gates of the US Embassy, the seat of US power in Iraq and the scene of violent clashes last month when militia supporters tried to storm the compound.
Main roads in Baghdad were barricaded by security forces and the city's Green Zone, which houses foreign missions, were blocked off with concrete barriers.
Outside the US embassy, a sign reads "warning. Do not cross this barrier, we will use pre-emptive measures against any attempt to cross".
The US killing of Iranian military mastermind General Qassem Soleimani in Baghdad this month has raised the spectre of more civil strife in a country torn by years of sectarian conflict.