A reformist MP Jafar Kambuzia from the provincial capital, Zahedan, said the violence flared on Thursday after a local driver was shot dead in the city of Saraven near the Pakistani border.
"The police shot and killed a motorist who refused to obey an order to stop. After this incident, people started to protest and there were clashes between residents and the police," Kambouzia told the student news agency ISNA.
"Unfortunately, despite the appeals to the police by local authorities for moderation in restoring calm, some of (the police) intervened and there were four deaths from gunfire," he said, adding that no police were killed.
He also said the protestors had destroyed "public property" and that following the clashes security forces had descended on the area in force.
"For now, calm has returned in the city, but local people believe the calm is precarious," Kambouzia said.
Tensions occasionally erupt in Sistan-Baluchistan, a poor province which has a large Sunni Muslim population among Iran's Shia Muslim majority.