At least five people were killed in Iran's southwestern province of Khuzestan in what state media described as a terrorist attack.
Iran's state TV said 15 others were wounded in the attack at the market in the city of Izeh on Wednesday.
The semi-official ISNA news agency said two gunmen in a car opened fire on people.
Iran's ethnic Arab minority, who mostly live in Khuzestan, have joined weeks of protests triggered by the death in custody of young Iranian woman Mahsa Amini on September 16.
"Five people were killed in the terrorist attack, including one child, one woman and three men," local official Valiollah Hayati told state TV.
ISNA said two members of Iran's volunteer Basij militia were among those killed.
Last month, Islamic state claimed responsibility for an attack on a shrine in the Iranian city of Shiraz that killed 15 people and injured dozens.
The semi-official Tasnim news agency said the seminary school at Izeh was set on fire by anti-government protesters. Videos on social media, unverifiable by Reuters, showed the building on fire while gunshots could be heard.
The protests ignited by the death of 22-year-old Amini while in the custody of Iran's morality police have turned into one of the boldest challenges to the clerical leadership since the 1979 revolution.
Iranians kept up anti-government protests on Wednesday despite an increasingly deadly state crackdown, social media reports showed. Iranian authorities have accused foreign adversaries of stoking the unrest to destabilise the Islamic republic.