Followers of the anti-US cleric brandished placards outside mosques in their Sadr City Shiite stronghold in the capital as security forces stepped up their presence there.
A key member of the Sadrist movement, Sheikh Mohannad Al-Gazawi, denounced the proposed deal that will extend the US troop presence in Iraq beyond 2008.
"This agreement binds Iraq and gives 99 percent of the country to America," he said.
The faithful carried placards slamming "the disastrous agreement that tears Iraq apart and gives in to the occupying power." Another said: "This agreement surrenders the sovereignty of Iraq."
Protesters burned an effigy of Prime Minister Nuri al-Maliki as well as a US flag before dispersing peacefully after about an hour.
In Kut, 175 kilometres (109 miles) south of Baghdad, hundreds of Sadrists staged similar demonstrations.
In the southern city of Basra, the spokesman for the Sadr bloc in the Baghdad parliament, Nassar al-Rubaie, joined a protest there, correspondents said.
Friday's demonstrations followed a call by Sadr to protest and force Baghdad to abandon its proposed deal with Washington.
Sadr said the proposed Status of Forces Agreement aimed to give a legal basis to US troops after the December 31 expiry of a UN mandate defining their current status, and was "against Iraqi national interests."
"After every Friday prayers, everyone must protest and demonstrate until the agreement is cancelled," he said in a statement sent to AFP on Wednesday.
Last November US President George W. Bush and Maliki signed a non-binding statement of principles for negotiations which began in March with the aim of concluding a pact by the end of July.
There are currently about 152,500 American servicemen and women deployed in Iraq, which was invaded by US-led forces in March 2003.
The proposed military pact has come under fire from other religious and political leaders, both in Iraq and in neighbouring Iran.
Fighters from Sadr's Mahdi army militia fought deadly street battles with US forces in the Shiite slum bastion of Sadr City in Baghdad for seven weeks until a May 10 truce took effect.
Iraq's national security council on Monday asked Maliki to ensure that the pact will not go against the national interest.
© 2008 Agence France Presse