Activists said security forces killed a protester during a raid on the home village of Bahrain's Shia spiritual leader on Tuesday.
Bahraini authorities said they made several arrests but did not comment on the reported death in Diraz, where supporters of Ayatollah Isa Qassim have set up a protest camp.
The Britain-based Bahrain Institute for Rights and Democracy (BIRD) announced the "tragic death of a peaceful protester in the crackdown" in Diraz, the scene of a long-running sit-in outside the home of Qassim.
Eyewitnesses told AFP multiple civilians were wounded when police opened fire at demonstrators throwing stones and Molotov cocktails at security forces.
Authorities have accused Qassim, sentenced on Sunday to a suspended one-year jail term for illegal fundraising and money laundering, of serving "foreign interests" and promoting "sectarianism and violence".
A court last year stripped him of his citizenship, sparking repeated sit-ins outside his residence in Diraz.
Bahrain's interior ministry said on Tuesday it had "launched a security operation in the village of Diraz to preserve security and civil order as the site is a safe haven for fugitives."