The shooting on a frontline of the 1975-90 civil war marks some of Lebanon's worst civil strife in years, and highlights a deepening political crisis over the probe into the catastrophic Aug. 4, 2020 blast.
The Lebanese army said in a statement the gunfire had targeted protesters as they passed through a traffic circle located in an area dividing Christian and Shi'ite Muslim neighborhoods.
As Prime Minister Najib Mikati called for calm, a military source told Reuters two people had been killed and seven more wounded.
The shooting began from the Christian neighborhood of Ain el-Remmaneh before spiraling into an exchange of fire, the source added.
Hezbollah's al-Manar TV said "two martyrs" and a number of wounded had been taken to a hospital in the Shi'ite southern suburbs, indicating that the casualties were Shi'ites.
Bursts of gunfire were heard for several hours, along with several explosions which appeared to be rocket propelled-grenades fired into the air, Reuters witnesses said.