Shots were fired by soldiers around Pearl roundabout in Manama, the Bahraini capital, a day after police forcibly cleared a protest encampment from the traffic circle.
The circumstances of the shooting after nightfall on Friday were not clear. Officials at the main Salmaniya hospital said at least 50 people were injured, some with gunshot wounds.
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Some doctors and medics on emergency medical teams were in tears as they tended to the wounded. X-rays showed bullets still lodged inside victims.
"This is a war," said Dr. Bassem Deif, an orthopedic surgeon examining people with bullet-shattered bones.
Protesters described a chaotic scene of tear gas clouds, bullets coming from many directions and people slipping in pools of blood as they sought cover.
Bahrain's crown prince, meanwhile, called for calm, saying it was "time for dialogue, not fighting".
"The dialogue is always open and the reforms continue," Crown Prince Sheikh Salman bin Hamad al-Khalifa said on Bahrain TV.
"We need to call for self-restraint from all sides, the armed forces, security men and citizens," he said. "I urge you, there should be calm. Now is time for calm."
Jalal Firooz, of the Wefaq bloc that resigned from parliament on Thursday, said demonstrators had been elsewhere in the city, marking the death of a protester killed earlier this week. The demonstrators then made for the roundabout, where army troops are deployed.
A doctor of Salmaniya hospital told Al Jazeera that the hospital is full of severely injured people after the latest shootings.
"We need help! Our staff is entirely overwhelmed. They are shooting at people's heads. Not at the legs. People are having their brains blown out," a distraught Dr Ghassan said, describing the chaos at the hospital as something close to a war zone.
Our online producer interviews a protester at a funeral in Sitra
He said the hospital was running short of blood and appealed for help to get more supplies. Police had no immediate comment.
An Associated Press cameraman saw army units shooting anti-aircraft weapons, fitted on top of armored personnel carriers, above the protesters in apparent warning shots and attempts to drive them back from security cordons about 200 meters from the roundabout.
One marcher claimed live ammunition was used against protesters.
"People started running in all directions and bullets were flying," said Ali al-Haji, a 27-year-old bank clerk. "I saw people getting shot in the legs, chest and one man was bleeding from his head."
In the past, security forces had mostly used rubber bullets.
Witnesses said about 20 police cars had driven toward the roundabout after the initial shooting.
Earlier, troops backed by tanks had locked down Manama and announced a ban on public gatherings. Tanks and armoured personnel carriers were patrolling the streets of Manama and checkpoints set up.
Tents at Manama's Pearl Roundabout were cleared of protesters by riot police in a raid on Thursday [Reuters]
Riot police using clubs and tear gas broke up a crowd of protesters in the city's financial district in a pre-dawn swoop on Thursday, killing at least four people and injuring more than 200.
Al Jazeera's correspondent, who cannot be named for security reasons, reported from Manama on Friday that thousands of people observed the funerals of those killed in the police raid on the protesters' tents in the city's Pearl Roundabout area.
Many of those present chanted slogans against Bahrain's ruling Al Khalifa family. They said they were both grief-stricken and angry at the heavy-handedness of the police, and that they were demanding that the international community take notice of what they call the brutality of the security forces.
