Fighters loyal to Moqtada al-Sadr shot down a US helicopter during clashes in the Shia city of Najaf that threatened to unravel a deal agreed in June to end an uprising by the militant cleric.
A US military spokesman said several crew members in the helicopter were wounded. Sadr's aides said the cleric's Mehdi Army militia had shot down the aircraft.
It was the heaviest fighting seen in Najaf since Sadr's rebellion in April and May. The city is home to the holiest shrines in Shia Islam, and most Iraqi Shia react with outrage when clashes erupt near the sacred sites.
Iraq's health ministry said at least two people were killed in the fighting and eight wounded. One person was also killed and four wounded when a mortar round hit a hospital in the city.
The US military said fighting began overnight when a police station was attacked by "a significant number of aggressors" believed to be members of the Mehdi Army militia.
In the town of Mahawil south of Baghdad, guerrillas detonated a car bomb and sprayed gunfire at a police station, killing at least six people and wounding 24, Iraqi officials said.
Police and Iraqi National Guardsmen have been frequent targets of bomb attacks by guerrillas opposed to the US-backed government and the presence of US-led troops in Iraq.
There has been no new word on the fate of three Indians, three Kenyans and an Egyptian held by kidnappers who have threatened to behead them one by one. The kidnappers want the Kuwaiti firm that employs the men to stop doing business in Iraq and to pay compensation to the victims of US strikes in Falluja.