Gunmen killed up to four people on Sunday in Khalde, south of Beirut, when they fired at the funeral procession of a Hezbollah member killed the day before.
Hezbollah confirmed that two people who were part of the procession were killed. Local media reported that up to four people had died in the clashes.
The dead reportedly include a member of the Iran-backed militia Hezbollah and a soldier, Voix du Liban (VDL) radio said.
Hezbollah member Ali Chebli, whose procession was attacked, was shot dead on Saturday in a vendetta killing after he allegedly murdered a young man from a Sunni Arab clan last August.
The violence reignited sectarian tensions between Sunni Arab tribes and Shiite Hezbollah supporters in the mixed suburb of Khalde, stoking fears of unrest as Lebanon slip further into a severe economic and political crisis.
The shooting comes days ahead of the one-year anniversary of the Beirut port blast, which killed at least 214 people and injured 6,500 others.
Footage of men on motorbikes holding up Hezbollah flags and chanting slogans circulated widely on social media. Lebanese TV channel LBCI said that Hezbollah gunmen had been deployed to the area.
Residents of Khalde heard rocket-propelled grenades and gunfire as the procession reached the house of Chebli, who was killed on Saturday.
The Lebanese Red Cross has called for “all parties to ceasefire immediately in Khalde so that our teams can intervene and provide the necessary care to all the wounded.”
Lebanon's armed forces have warned they will open fire on anyone seen carrying a weapon in the area.
“The army units deployed in Khalde will shoot at any gunman on the roads of Khalde and at anyone who shoots from anywhere else,” the army said in a post on Twitter.
Prime Minister-designate Najib Mikati urged residents of Khalde to “be careful and exercise restraint to prevent bloodshed and avoid being drawn into civil strife and useless fighting.”
Mr Mikati also called Lebanese Armed Forces Commander General Joseph Aoun, who told him that “the army will strengthen its presence in the area to control the situation,” the National News Agency reported.
Chebli was killed at a wedding on Saturday, a shooting that has revived sectarian tensions between local Sunni Arab clansmen and supporters of the Iran-backed Shiite group Hezbollah.
Chebli is accused of killing a boy from a Sunni clan in the area last year.
The family of the murdered boy said in a statement on Sunday that the brother of the deceased boy had killed Chebli out of revenge.
The family said it had pleaded with the police and with the judiciary to arrest Chebli, but that he was “protected” by unnamed groups.
“Our attempts were met, over the course of a whole year, with the refusal by those protecting Ali Chebli to hand him over to authorities, despite the tireless attempts made by the Lebanese Army in this regard, to no avail.”
The leadership of Hezbollah is following the violence in Khalde with great interest, the group said in a statement.
"We call on the army and security forces to intervene decisively to impose security and to work quickly to stop and arrest the criminal killers."
Hezbollah confirmed that two of the people killed were part of Chebli's funeral procession.
Among the dead from Sunday's clashes was Hezbollah's co-ordinator in the town of Aramoun and Chebli's brother-in-law, LBCI said.
The renewed violence in Khalde has brought back memories of similar clashes in the suburb last year.
Last August, members of Hezbollah and its ally Amal clashed with local clansmen after the two Shiite groups tried to place a banner for the Shiite holiday of Ashura in an area inhabited by Sunnis and Shiites.
The move was seen as a provocation by the Sunni clansmen. Fighting lasted for three hours and ended with the killing of two people.