Explosions and gunfire lasted for some six hours and included clashes around the main police station located less than a mile from some of the holiest Shiite shrines, Reuters reported.
The golden dome of the Shrine of Imam Ali was damaged during the fighting, and both sides blamed the other for the multiple holes torn into the dome.
"Let me make it clear we did not attack the Shrine of Imam Ali," U.S. military spokesman Brig, Gen. Mark Kimmitt said in Baghdad.
At least seven U.S. tanks entered Najaf's vast cemetery, where Shiites around the world wish to be buried within sight of the city's sacred shrines.
Members of al-Sadr's al-Mahdi Army have been using the sprawling graveyard to stage hit-and-run attacks on U.S. positions on the edge of town, Reuters reported.
Shells burst among the tombs and guerillas fought back with rocket-propelled grenades and mortars.
Insurgents in Karbala, meanwhile, fired rockets and mortars near two central holy sites, the Shrine of Hussein and the Shrine of Abbas. U.S. Apache helicopters circled overhead, but American forces held back from attacking the shrines, according to The New York Times.
U.S. troops seized another mosque in the city, where they found a weapons cache and plastic explosives wired to ammunition.
Further south in Nasiriyah, gunmen attacked the coalition headquarters, trapping some international staffers inside, coalition officials said.
The fighting occurred around 7 p.m. local time and involved militiamen and Italian troops supported by Filipino security guards, officials said. About five rocket-propelled grenades were fired at the building, according to the Associated Press.
About ten coalition staffers, including Americans, Britons and Italians, ten drivers and security guards and four Italian journalists were holed up in the building.
Al-Sadr's representative in Nasiriyah, Sheik Aws al-Khafaji, threatened further attacks on coalition forces.