Four people were killed when police clashed with former rebels barricading the road into the Ivorian city of Bouake, as part of the spillover from a corrosive army mutiny over pay.
The protesting ex-rebels said security forces opened fire to disperse them on Tuesday, but the government denied responsibility.
"Security forces deployed conventional measures to maintain order," Interior Minister Hamed Bakayoko said in a statement.
"But some of the armed demonstrators pulled the pin out of a grenade that exploded among them," he added.
Three bloodied bodies were brought into the main Bouake hospital, an AFP reporter said, shortly after police stepped in to evict protesters who had obstructed the northbound road into Ivory coast's second biggest city on Monday.
A fourth person later died, and around 15 people were seriously injured in the clashes, hospital sources said.
The highway into Bouake is the main road for the world's top cocoa producer, linking the economic capital Abidjan in the south to northern Ivory Coast and to its commercially vital neighbour Burkina Faso.
"This is serious," said a rebel spokesman, Amadou Ouattara. "I never would have imagined shooting at unarmed people who are demonstrating."
The violence follows a crippling four-day mutiny by former rebels who joined the army in 2011 when peace returned after a decade-long war that had split the country in two.
The 8,400 mutineers last week halted their protest and returned to barracks after reaching an agreement with the government in the pay dispute.
The mutinous soldiers are to get bonuses of 12 million CFA francs (18,000 euros) each.
The rebels protesting in Bouake are among 6,000 nationwide who did not join the army, but who are now demanding identical compensation from the government for the war.
During the 2002-2011 conflict, Bouake was used as rebel headquarters, with a force estimated at tens of thousands.
Security forces were out in significant numbers on Tuesday morning to clear the highway into Bouake, which during last week's mutiny saw some 500 trucks backed up during several days.
Traffic had begun to return to normal this weekend, and police remained stationed on the highway after dispersing the protesters.
The police assault took place in the morning. "Police started hurling tear gas," said Diakite Aboudou, a spokesman for the former rebels.
"We could hear the sound of grenades," he added. "Then we heard automatic gunfire and the sound of Kalashnikovs. The dead were killed by gunfire.
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