A senior commander of an Iran-backed militia has been killed in a US drone strike in Baghdad.
The Pentagon said the commander was responsible for directing attacks on American forces in the region.
The US has linked the militia to a drone attack in Jordan that killed three US troops last month.
In the wake of that attack, Kataib Hezbollah said it was suspending attacks on American troops to prevent “embarrassment” to the Iraqi government.
Wednesday night’s drone raid happened in Baghdad’s Mashtal neighbourhood, sparking several loud explosions.
It was a precise strike on a moving vehicle in a busy street and the car was reduced to a fiery wreck.
One of the victims has been identified as Abu Baqir al-Saadi, a senior commander in Kataib Hezbollah.
US Central Command (Centcom) said the attack at 21:30 local time (18:30 GMT) had killed the “commander responsible for directly planning and participating in attacks on US forces in the region”.
“There are no indications of collateral damage or civilian casualties at this time,” the Centcom statement said.
When a BBC team reached the scene, crowds of protesters gathered chanting: “America is the biggest devil.”
There was a heavy police presence, joined by Swat teams from Iraq’s interior ministry.
The BBC team tried to get close to the burnt-out vehicle, but was driven back by onlookers who said journalists were not welcome.
“You are foreigners,” one man shouted, adding “and foreigners are to blame for this”.
The raid comes days after the US launched 85 strikes in the Iraq-Syria border area in retaliation for the fatal 28 January drone attack on American troops at a base in Jordan.
President Joe Biden described last Friday’s wave of attacks as just the beginning of the US response.
The drone raid in the Iraqi capital will be seen as a major escalation.
But it was perhaps inevitable that the American strategy would include targeting not only infrastructure used by the groups, but also their senior leaders.
Shortly after Wednesday’s attack, militias in the country called for retaliation against the US.
Harakat al Nujaba – another group blamed for attacks against American troops – released a statement promising a “targeted retaliation”, adding that “these crimes will not go unpunished,” according to AFP.
On 4 January, the US launched an airstrike in Baghdad that killed a senior leader of Harakat al Nujaba.
American forces have been hit with more than 165 rocket and drone strikes since the Israel Gaza war began on 7 October.
The US has some 2,500 troops in Iraq and 900 in neighbouring Syria in a mission to combat the Islamic State terror group, says the Pentagon.
The American military has also recently launched attacks against the Iran-aligned Houthi group in Yemen, in response to attacks against commercial ships in the Red Sea.