The motorist had overtaken a military convoy on his way to the hotel where he was making final preparations two days ahead of his wedding, police and relatives said.
The unidentified man, who had a passenger in the vehicle, was shunted into a wall by a Humvee as he was about to turn his car around to enter the hotel, one hotel guard said.
"They bumped his car until he lost control, crashed into the wall and then the Americans shot him three times at close range," the guard said.
The survivor of the crash, his hand stained in blood, said they were about to go to the hotel to make the reservation for his friend's marriage on Thursday.
Standing by the corpse lying on the street, his face covered with a blood-soaked cloth, the dead man's brother cursed and punched his own head.
He shouted, "There is no honest man among Iraqis! We let the Americans do this to us and even you (police), from now on every policeman on the street is my enemy because you did not stand up for us."
"You are all bastards."
The dead man's father said: "He was the groom. He was going to get married. Why did they kill him. He is an engineer."
The father vowed to join the resistance against US occupation troops in Iraq.
"God curse the Americans! God curse the Americans!"
"God curse the Americans! God curse the Americans!", he shouted.
A policeman at the scene said the US soldiers apparently thought the two Iraqis in a burgundy Nissan vehicle had been trying to attack them. However, no weapons were found.
US soldiers from the two Humvees involved in the incident stood in the street, gripping their weapons, nervous and uncertain what to do.
They refused to comment and left the scene, witnesses said.