Officials say another protester was wounded during the shooting in a small town, southwest of the capital Kathmandu, where hundreds of demonstrators clashed with police.
The clash came as the royal government relaxed a daytime curfew in Kathmandu.
Daytime curfews, some with shoot-on-sight orders, were first imposed Saturday. Hundreds have been injured since then.
Witnesses in Kathmandu said at least 25 journalists were arrested Wednesday for staging a protest against media restrictions. More than 1,000 people have been jailed since the protests began last Thursday.
The violence has prompted international calls for King Gyanendra to end his crackdown on the protesters who are demanding an end to his absolute power and the restoration of multi-party democracy.
Fourteen months ago, the king dismissed the elected government and seized absolute power, saying the government had failed to control a communist insurgency.
Monday, Washington urged Nepal's king to restore democracy immediately and open a dialogue with the country's constitutional political parties.
Some information for this report was provided by AP and Reuters.