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Protesters have entered the Iraqi parliament building
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Supporters of Shia cleric Moqtada Sadr broke through barricades of the protected Green Zone in Baghdad after MPs again failed to convene for a vote.
A state of emergency has been declared in the city, but not a curfew.
Security forces near the US embassy later fired tear gas to stop more protesters entering the Green Zone.
Mr Sadr wants PM Haider al-Abadi to commit to a plan to replace ministers with non-partisan technocrats.
Powerful parties in parliament have refused to approve the change for several weeks.
Earlier this week, hundreds of thousands of people marched towards the Green Zone, the most secure part of Baghdad that houses embassies and government buildings, to protest against the political deadlock.
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The Shia protesters unfurled banners after storming
parliament
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Delighted protesters cheered and posed for photos
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Protesters breached blast walls to reach the building
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The demonstrators streamed through the Green Zone's defences
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Stones were thrown at cars thought to be carrying MPs away
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A new protest outside the zone escalated after parliament again failed to reach a quorum on Saturday.
Groups marched on the district soon after the end of a televised appearance by Mr Sadr, although he did not call for the storming of parliament.
The protesters tried to topped lawmakers attempting to flee the building.
One protester, Ali Mohammed, said they were angry at the politicians' failure to act.
"The people have come to the right place, to rule themselves," he told Reuters news agency.
"The people are now staging a sit-in inside parliament. Our legitimate and only demand is to dismiss the government and replace it with an independent cabinet of technocrats."
Crisis escalates - BBC Middle East analyst Sebastian Usher
This is a major escalation of a political crisis that's been brewing for months. The Iraqi prime minister set out an ambitious programme for reform last year - intended to foster a sense of political unity and accountability to help Iraq tackle the challenge of a failing economy and even more urgently, the battle against IS.
But he's met fierce opposition at every turn in his attempt to cut off the political and financial corruption that's enriched and empowered the elite for so long.
Moqtada Sadr has ostensibly supported him in this aim - having reinvented himself as the voice of the angry Iraqi people, fed up with the status quo.
But with the storming of parliament by his followers, there must now be a big question over whether he offers support to the beleaguered prime minister, or a challenge.
'Lockdown'
The protesters are reported to have begun ransacking parliament buildings. United Nations and embassy staff were on lockdown inside their compounds, Reuters reported.
Iraq's system of sharing government jobs has long been criticised for promoting unqualified candidates and encouraging corruption.
Mr Abadi, who came to power in 2014, has promised to stamp out corruption and ease sectarian tensions, but he has failed to far to introduce a new technocratic cabinet.
A survey by the Pew Research Centre in 2011 found that 51% of Iraqi Muslims identified themselves as Shia, compared with 42% Sunni.
Elsewhere in Baghdad, a car bomb targeted a group of Shia Muslim pilgrims on Saturday, killing at least 21 people.
Who is Moqtada Sadr?
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Shia Muslims make up most of
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The Shia cleric and his militia group, the Mehdi Army, gained prominence after the US-led invasion of Iraq in 2003. galvanising anti-US sentiment.
Mr Sadr's followers clashed repeatedly with US forces, whose withdrawal the cleric consistently demanded.
An arrest warrant was issued for Mr Sadr in 2004 in connection with the murder of a rival cleric.
His militia was also blamed for the torture and killing of thousands of Sunnis in the sectarian carnage of 2006 and 2007. Mr Sadr fled to Iran during that period.
In 2011, Mr Sadr returned from his self-imposed exile to Iraq, taking a more conciliatory tone and calling for Iraqi unity and peace.
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