The attackers struck at around mid-day in the ethnically- mixed town of Tuz Khurmatu, interim town mayor Talib al-Bayati said. A doctor confirmed the toll.
Among the dead were a former deputy provincial governor and his two sons.
The protesters had been rallying over poor security in the town, which is regularly hit with attacks.
Tuz Khurmatu lies within a tract of territory that Iraqi Kurdistan wants to incorporate into its three-province region over Baghdad's objections.