A US Army spokesman said several members of the helicopter crew were wounded but had been evacuated. The helicopter had been transporting a wounded soldier when it came under small arms fire, the spokesman added.
At least 16 Iraqis were killed and more than 102 wounded in the clashes between Muqtada al-Sadr's militia and US troops, an Aljazeera correspondent based in Najaf reported.
US forces said one soldier was killed and five others wounded when their convoy came under attack on the outskirts of Najaf cemetary.
Hospital staff hit
Aljazeera earlier reported that several explosive rounds, thought to be from mortar fire, hit in and around Najaf General Hospital on Thursday.
One of the dead and four of the wounded were hospital staff, said doctor Ali Hanun in Baghdad. It was not immediately clear who fired the rockets at the hospital.
Earlier, the health ministry reported that two people were killed and eight others wounded in the fighting.
Rockets that struck a Baghdad
hospital injured several medics
The encounter took place at Thawrat-al-Ishrin square where US helicopter gunships and armoured vehicles were in action, reported our correspondent Uday al-Katib.
Light and medium weapons as well as mortar shells were used in the clashes which started near major police stations early on Thursday. The clashes were continuing well into the morning, the correspondent said.
The fighting, which killed a man and a woman, broke out near the 1920 Revolution Square at 12.30am (2030 GMT).
Heavy clashes took place at Thawrat-al-Ishrin square where US helicopter gunships, armoured vehicles mortar rounds, and heavy explosives were in action, reported our correspondent.
People ran for cover as fighting
erupted on the streets of Najaf
Clashes broke out for a second time at 3am on Thursday morning, he said, adding that fighting was raging with mortar rounds landing in some areas and loud explosions heard in parts of Najaf town.
The sound of artillery as well as medium and light machine gun fire was heard along with rocket-propelled grenades, he said.
A large number of US occupation troops accompanied by Iraqi police had advanced into the town, the correspondent said.
The roads in the town are deserted and traffic has come to a standstill, al-Katib reported.
Aljazeera team shot at
"We have no access to more detailed reports on the fighting as the Aljazeera team was shot at when we tried to take a closer look at the scene and we were forced to draw back," the correspondent said.
"...the Aljazeera team was shot at when we tried to take a closer look at the scene and we were forced to draw back"
Najaf governor Adnan al-Zurfi requested back-up from US marines after the main police station was attacked for a second time in two hours, the US occupation military said.
Agencies quoting a US military statement said: "A significant number of aggressors ... began attacking the station with heavy machine guns, rocket-propelled grenades, mortars and small arms ... after an initial attack on the police station around 1am was unsuccessful."
On Wednesday, the Mahdi Army also released five of six Iraqi police officers taken captive in recent days, the military said.
The fighting has come just three days after clashes outside al-Sadr's home between the Mahdi Army and US occupation troops left one civilian dead and nine people wounded, including six of the al-Mahdi Army.
Al-Sadr's office accused US troops of trying to arrest the Shia Muslim leader, but the US military said a marine patrol was attacked by a Mahdi Army fighter as it drove by.
Although the June truce allowed Iraqi police to restore its presence in Najaf, the area around the city's holiest shrine, the mausoleum of Imam Ali, remains an al-Sadr stronghold.