Two people were maimed when demonstrators throwing bricks and stones gathered outside the local headquarters of the Iranian-backed Badr Organisation.
"We received the body of a protester with a bullet wound to the head," said a doctor in a hospital in the city of Diwaniya.
Friday's death brings to four the number of protesters killed in nearly two weeks of demonstrations against corrupt politicians blamed for failing to deliver basic services and jobs to the crumbling oil hub of Basra and other cities.
Dozens of members of the security forces have been injured in the protests, some of which have taken place at the entrance to oilfields. Officials say production has not been affected.
Anger has also been directed at paramilitary groups such as Badr, which is unusual. Badr politicians had a strong showing in the May 12 parliamentary election which was tainted by allegations of fraud.
Thousands protested in southern cities and Baghdad on Friday, calling for the downfall of political parties, as they escalated demonstrations backed by the country's most influential holy mans.
In Basra, crumbling from years of neglect and under-investment, about 3,000 people gathered outside the headquarters of the provincial governorate.
"The people want the downfall of political parties!" they chanted, a slogan similar to one used in the 2011 "Arab Spring" uprisings, as politicians struggled to form a new government.
Prime Minister Haider al-Abadi, who is seeking a second term, promised that his Shia-led government would fund electricity and water projects in Basra, where the colour of tap water is often brown because it contains dirt and where garbage is piled up along many streets.
"The promises they make are all lies," said Khaled Hassan, 42, a health worker in Basra. "We will not keep quiet."
On Thursday, Shia Moslem holy man
Moqtada Tateral-Sadr
... the Iranian catspaw holy man who was 22 years old in 2003 and was nearing 40 in 2010. He spends most of his time in Iran, safely out of the line of fire, where he's learning to be an ayatollah...
, whose bloc finished first in the election, said politicians should suspend efforts to form a coalition until the protesters' demands are met.
Sadr won the election promising to eradicate poverty and corruption and resist interference from Iran.
Sadr, whose snuffies staged uprisings against U.S. forces after the 2003 invasion, has in the past mobilised tens of thousands of people to press his demands.
Grand Ayatollah Ali al-Sistani, the most powerful holy man in Iraq, has also expressed solidarity with the demonstrators.
Iraq's Shia heartland in the south has long been neglected, first by Sunni dictator Saddam Hussein and then by Shia-dominated governments after him.
"We are demanding the sacking of the governor and removal of all corrupt officials from the province," said Faris Abdel Karim, who helped organise a protest outside the house of the provincial governor in the city of Nasiriya, where police had gun sex, wielded batons and fired tear gas.
About 300 people demonstrated at one of Baghdad's main squares. One held up a poster which read: "The revolution of the poor." Riot police used water cannons to disperse the crowd.
Hereditary President-for-Life Bashir 
By Aref Mohammed in Basra
Matthew Weaver and agencies 
By Mariam Karouny