The protests later spread to the 300-kilometre-long Jammu-Srinagar National Highway after which the highway was closed.
The violence this morning erupted in Gool town of Ramban district, around 145 kilometres from Srinagar at a BSF station where a group of people had gathered to protest against the alleged manhandling of a religious leader by the BSF men on Wednesday evening.
The BSF said they fired in defence when protesters tried to storm their camp.
The authorities have imposed curfew in the Kashmir Valley in the wake of the protests and they say it will continue tomorrow. Meanwhile, the Ramban Collector has been transferred. Mobile Internet services too have been suspended in Kashmir; authorities say it was done in order to prevent rumour-mongering on social networking sites.
Chief Minister Omar Abdullah condemned the incident. "It is highly unacceptable to shoot at unarmed protesters just because they were reportedly protesting manhandling of an Imam of their area," Mr Abdullah said in a statement.
In Delhi, Home Minister Sushil Kumar Shinde regretted the killings and ordered a probe. "I have ordered an inquiry to be conducted without any loss of time to ascertain the circumstances leading to the firing. I assure that any use of excessive force or irresponsible action shall be dealt with strictly," he said.
Clashes also erupted in Srinagar after people protested against the killings. Separatist groups have called for a three-day strike against the deaths from Friday.
This is the second incident of alleged civilian killings by security forces in less than three weeks. Two people were killed in Bandipore district in north Kashmir reportedly during Army firing.