Witnesses said the clashes went on for a couple of hours overnight on Wednesday.
"During the night, nine dead civilians and 16 wounded, among them women and children, were brought in," said Ali Aradawi, who heads the emergency room at the main hospital in Karbala, where US forces and Shia fighters have been engaged in several weeks of fierce clashes.
A guard at one of the main Shia shrines said "fighter planes fired rockets between the Hussain and Abbas mausoleums against members of Muqtada al-Sadr's Mahdi Army, killing and wounding a number of people."
"The clashes lasted from midnight to two am (20:00 GMT to 22:00 GMT on Wednesday)," said Rassim Hussain Massawi, a guard at the Imam Hussain mausoleum.
A medic said the militiamen loyal to the Shia leader refused to be treated at the hospital in the Shia holy city for fear it may be searched by the US-led occupying forces.
A military spokesman in Baghdad said he had not received any report of the overnight clashes, but US forces said Camp Kilo in Karbala was attacked by mortar fire.
"No coalition soldiers were injured, no damages reported," the multinational division said in a statement.
Karbala, 110 kilometres south of Baghdad, was seized by al-Sadr's Mahdi Army at the start of last month in an uprising that swept across central and southern Iraq against the US-led occupation.