"I declare I had nothing to do with any of the bloodshed and violence against anyone," said Sadr, who occupation officials have said is under investigation for links to several attacks involving his supporters.
"I said before we must raise the slogan of non-violence and peaceful resistance," the young cleric told thousands at the Kufa mosque on Friday, 150 km south of Baghdad.
Sadr said US forces were blaming him for last week's clashes between his militia, the Mehdi army, and the followers of pre-eminent Shia cleric Grand Ayatollah Ali Sistani.
"The Americans have used this division to make a war on me and discredit the Mehdi army, especially since I declared a new government which does not make any difference between any group," Sadr told worshippers in Kufa.
Occupation troops say Sadr's backers
were arrested by Iraqi police
He rejected the notion of any feud between the Shia factions.
"There is no war between the Shias," he said.
Sadr argued that he stood on the side of the just while the Americans looked to stir unrest among the country's 15 million-strong Shia majority.
"It is a war between right and wrong. The occupation was supporting the attackers (in Karbala) giving them ammunition and weapons," he said.
Sadr, who comes from a long line of revered clerics, also lashed out at the Iraqi police for helping US troops.
Earlier in the week several Sadr supporters were detained in a raid on the al-Mokhayam mosque in Karbala, which the US insists was conducted by the Iraqi police. Sadr followers said the operation was conducted by US forces using helicopters.
On Friday, 15 of the detainees were released, according to Methal al-Hasnawi, a pro-Sadr cleric.
"I said before we must raise the slogan of non-violence and peaceful resistance"
Shia cleric, Iraq
"Fifteen of the 38 people were freed," he said, adding that talks would be held with US and Polish troops in Karbala to obtain the release of those still being detained.
Three clerics are among those still held, he said. A demonstration would be staged if the men are not freed, al-Hasnawi added.
Sadr supporters reopened the mosque, which was closed after the military and police raid, al-Hasnawi said.
In his Friday sermon, al-Hasnawi issued a thinly-veiled criticism of Sistani, without directly naming him.
"There are unfortunately among us people who act hand in hand with Americans and Zionists," he said.