The violent arrest of Ahmed al-Alwani in the Sunni-dominated western province of Anbar is likely to inflame tensions in the area, where protesters have been demonstrating against what they see as marginalisation of their sect by Prime Minister Nuri al-Maliki's Shi'ite-led government.
Alwani belongs to the Sunni-backed Iraqiya bloc and has been a strong critic of Maliki and an influential figure in the protest movement.
Police sources said a two-hour fire fight broke out on Saturday when bodyguards and members of Alwani's tribe resisted police and army forces who went to arrest Alwani on charges of "terrorism".
They said those killed in the fighting included three of Alwani's bodyguards, his sister and his brother.
"Army troops with police special forces were trying to arrest Alwani from his house, but fierce fighting erupted. Five bodies, including one woman, were taken to Falluja hospital," a police source said.
No members of Alwani's family could immediately be reached to give their version of events. Parliament speaker Usama al-Nujaifi, a Sunni, called the operation a blatant violation of Iraq's constitution and a "dangerous precedent."
Lieutenant-General Ali Ghaidan, commander of Iraqi ground forces, told state television that security forces had also tried to arrest Alwani's brother Ali, whom he accused of involvement in attacks that killed Iraqi soldiers in Anbar.
Ali was killed, as well as one Iraqi soldier, Ghaidan said.
"We treated Ahmed al-Alwani well. We told him that we had a warrant for his arrest, and arrested him," he said, adding that two of Alwani's bodyguards were wounded.
Violence in Iraq is at its worst levels since 2006-07, when tens of thousands of people were killed in fighting between Sunnis and Shi'ites. Bombings, shootings and suicide attacks, many staged by al-Qaeda militants, are a near-daily occurrence.
Many Sunnis in the region are likely to see the latest arrest as another example of what they portray as a crackdown against minority Sunni leaders.