Crowds gathered shouting slogans and burning tyres
At least four civilians were killed and 18 others wounded when Nato forces fired at a bus in southern Kandahar province, sparking angry protests.
Nato expressed its "deep regret" over the incident and said forces treated the injured at the scene.
Crowds gathered in Kandahar shouting slogans and burning tyres. President Hamid Karzai also condemned the firing.
Civilian deaths at Nato hands is the source of increasing friction between the Afghan government and Nato.
Last week Nato admitted its forces were responsible for the deaths of three women during a botched night-time raid in eastern Afghanistan in February.
And it is also investigating whether its forces killed four civilians in an air strike in southern Helmand province in early April.
The bus that was attacked on Monday was travelling from Kandahar to western Herat province, provincial officials said.
Later about 200 men took to the streets of Kandahar to protest against the killings shouting, "death to America, death to Karzai, death to this government", the AFP news agency reported.
Nato is continuing to investigate the incident. A statement says the patrol warned off the approaching vehicle with a flashlight and flares.
"Perceiving a threat when the vehicle approached once more at an increased rate of speed, the patrol attempted to warn off the vehicle with hand signals prior to firing upon it," the statement says.
Nato and Afghan forces are currently engaged in a massive anti-Taliban operation to rid parts of southern Helmand province of militants.
Nato officials have indicated that the offensive will switch focus to Kandahar in the coming months.
Since taking up his position as top commander in Afghanistan, Gen Stanley McChrystal has said reducing civilian casualties is a key priority for Nato.
He has introduced changes to Nato tactics aimed at cutting the risks to civilians. Measures include reducing the number of air strikes and night raids.