At least 18 Shias have died in the last two weeks
Hundreds of protestors blocked roads and set two cars on fire as the procession passed through the city.
Police said the men - described as activists from the banned Shia militant group Tehrik-e-Jafria - were killed on Monday in what appeared to be a sectarian attack.
Zulfikar Haider and Anwar Ali were sitting outside their home in Karachi when gunmen opened fire.
At least four other people were killed on Monday in the latest suspected sectarian killings in Pakistan.
A businessman from a prominent Shia family was shot dead in Muzaffargarh in Punjab province.
And a suspected Sunni militant was killed in an encounter with police.
The killings, which bring to 18 the number of Shias killed in Pakistan in the last two weeks, come in the run-up to Muharram, the Shia commemoration of the death of the Prophet Muhammad's grandson.
'Sunni militant' killed
Reports named the suspected Sunni militant shot dead by police as Shakeel Anwar, of the outlawed extremist group, Lashkar-e-Jhangvi.
Police said his vehicle was ordered to stop at a checkpoint in Bahawalpur in southern Punjab province.
But he tried to speed away and was killed in the ensuing exchange of fire, according to the police.
It is not known who carried out the killings in Karachi, but the rising incidence of sectarian violence comes despite a pledge by Pakistani President Pervez Musharraf to crack down on extremist groups.
The Pakistani leader announced a ban on five militant groups, leading to the arrests of hundreds of their members.
More than 2,000 people have been killed in the past decade in sectarian violence in Pakistan, where Sunni Muslims form the majority.
Shias make up about 20% of the population.