A number of American soldiers were also wounded in the 15 December incident, a senior US officer said on Saturday without giving an exact figure.
"US troops opened fire indiscriminately on a spontaneous demonstration" staged in the Adhamiyeh neighbourhood of northern Baghdad in reaction to the announcement of the capture of Saddam Hussein, said an official from the Association of Muslim Ulama, which groups Sunni religious scholars.
"Four protesters were killed and others were injured," said Shaikh Abd al-Salam al-Kubaissi.
Black banners carrying the names of the four victims were strung outside a mosque in Adhamiyeh on Saturday.
The four - Uthman al-Nuaiman, Umar Abd al-Wahhab, Bilal Hindawi and Usama al-Mashhadani - were "felled by US bullets on 15 December," the banners said.
Witnesses had said on the day of the demonstration that the protest turned into a clash with police during which two police stations were attacked and security men opened fire to disperse the protesters.
Brigadier General Mark Hertling, assistant division commander in the 1st Armored Division deployed in Baghdad, confirmed that "four (people) were killed, seven wounded and 23 captured" during Monday's incident.
"A number of American soldiers were wounded" when "shots were exchanged," he said, adding that pro-Saddam demonstrations are "outlawed."
The ousted Iraqi leader, who was captured by US forces on 13 December, enjoys support in the Adhamiyeh district, where he made his last appearance on 9 April when Baghdad fell to US-led forces.