"Fadel Salman Matrouk was shot by a hollow-point bullet in front of Suleimaneya hospital where people had gathered for the funeral of the first martyr," Shiite opposition MP Khalil al-Marzooq told AFP by telephone.
The interior ministry said that "some of the people participating in the the funeral clashed with forces from a security patrol," leading to Matrouk`s death.
"An investigation is underway to determine the circumstances surrounding the case," it said.
Msheymah Ali died in the hospital early on Tuesday after he was wounded as Bahraini police dispersed crowds of anti-government protesters in a village east of Manama, officials said.
The interior ministry announced the death of a protester "due to his wounds" and opened an inquiry into whether police resorted to "unjustified use of arms" in dispersing the protest in Diya village.
Witnesses said Ali was wounded late on Monday during clashes between demonstrators and police.
News of the two deaths prompted activists, who posted pictures of both men on a Facebook page, to call for a huge turnout at their funerals and to step up anti-government protests.
Witnesses told AFP that protests were held Monday in a string of Shiite-majority villages to the west, east and north of the capital as well as in the historic Balad al-Qadim quarter of Manama city centre.
Turnout at the rallies ranged from between a few dozen to hundreds of people, they said.
"There were no arrests during the the demonstrations, but the police in some cases clashed with the protesters," a police official told AFP.
Security forces were deployed in force along the main routes into Manama in a bid to head off rallies called on the Internet, mirroring similar online initiatives around the Arab world.
The Facebook page which called for a February 14 uprising, inspired by the protests which ousted the regimes in Tunisia and Egypt, had attracted more than 22,000 "likes" by Tuesday.
A message on the page read: "This is your chance to open the way for political and social reforms in line with changes taking place in the Middle East. On February 14, we will chant together: `The people want reform of the regime.`"
As in other Arab countries, tech-savvy Bahrainis are using the Internet to demand that the government create jobs for unemployed young people and increase wages.
Shiite-majority Bahrain is ruled by the Sunni Al-Khalifa family of King Hamad, which retains a tight grip on the premiership and key ministries.
In the 1990s, the Arab state which faces Iran across the Gulf waterway, was plagued by a wave of Shiite-led unrest that has abated since 2001 reforms restored parliament.
But the Shiite opposition opposes the elected house`s legislative powers being shared with an appointed upper house and accuses authorities of trying to alter the archipelago`s demographic make-up by naturalising Sunni immigrants.(*)