According to hospital staff and the US military, dozens more were wounded.
US occupation troops said they had killed about 20 fighters when soldiers backed by tanks raided a mosque in the neighbouring town of Kufa. The occupation claimed al-Sadr supporters were inside the mosque.
"An estimated 20 Mahdi militia were killed after firing on coalition forces during a raid on the Sahla mosque in Kufa," a US military spokesman said. No US casualties were reported.
Staff at the main hospital in Najaf said they had taken in 14 dead and 37 wounded.
Aljazeera's correspondent reported seeing pools of blood inside the green-domed al-Sahla mosque. Spent bullet casings littered the courtyard. The shrine lies about 1.5km from the town's main mosque where al-Sadr regularly preaches.
Residents of the city reported US occupation forces also detained three women inside the mosque.
Other reports said US tanks appeared to have broken down the wooden outer doors and demolished archways in the courtyard.
About 100 residents gathered at the mosque, expressing outrage at the damage.
"I feel humiliated," said Ali Wasi. "Our sanctity has been violated. These houses of prayer are the most valuable things we own, for Shias. I will resist them until the last drop of blood in my body," he said.
US aircraft also struck nearby Najaf, where a Reuters correspondent counted 14 bodies at the main hospital, including three women. Doctors said the dead appeared to be mainly civilians and Iraqi police hit at Najaf's main police station.
The doctors said 37 people were wounded during the strikes, when US aircraft pounded areas to the north of Najaf's ancient, sprawling cemetery after midnight (2000 GMT). Intense shelling could be heard from the Kufa area until after dawn.
A blood-soaked sheet is evidence
of the mortar strike in Basra
Aljazeera reported Dr Ahmad Rustum, director of al-Furat al-Awsat hospital, as saying nine bodies were received at the hospital. Twenty-two others were injured during the clashes.
US occupation forces also completely closed off all entrances to the hospital from 2:00am to 5:00am (2300 to 2100 GMT), preventing anybody from entering or leaving, Dr Rustum said.
US commanders reportedly dismissed on Saturday an offer from an al-Sadr aide for a deal under which both sides would withdraw from Najaf and the holy city of Karbala, 50km away.
Karbala was reportedly calm on Sunday.
Iraqi woman killed
An Iraqi woman has been killed and five others, including two children injured, when a mortar bomb was dropped on to the al-Mawani neighbourhood in Basra.
The 60-year old woman was killed when a mortar shell hit her home in the northern outskirts, according to Mustafa Sahab, a doctor at the city's hospital said on Sunday.
Sahab said a four-year old and a seven-year old, as well as two 20-year old women were wounded in the overnight attack.
Earlier on Sunday, two Iraqis including a policeman were killed and a third injured in an attack on their vehicle as they travelled to Baghdad from Baquba.
Aljazeera's correspondent reported that unknown armed men opened fire on their vehicle.