Witnesses said 17-year-old Zahid Farooq was killed Friday when security forces opened fire after a group of boys refused to leave a high-security area.
Police in the Muslim-majority region where a revolt against Indian rule began two decades ago said they were investigating the death.
Kashmir Chief Minister Omar Abdullah vowed strong action over the boy's death.
"Incidents of unprovoked or innocent killings will not be tolerated and whosoever is involved in such killings will be brought to book and doled out exemplary punishment," Abdullah said in a statement.
But Abdullah's promise failed to placate residents of Brein, the suburb of state summer capital Srinagar where the killing took place.
Thousands of men, women and children took to the streets, shouting pro-freedom and pro-Islamic slogans.
The region was already in an uproar over the killing of 14-year-old Wamiq Farooq by a police tear-gas shell last Sunday and the latest death has fuelled anger against Indian security forces.
The government has banned the assembly of more than four people in Srinagar but it has been unable to contain the protests.
Indian troops have also sealed off neighbourhoods in Srinagar and arrested dozens of activists in a bid to calm rising tensions.
About 150 protesters and policemen have been injured in clashes since Wamiq Farooq's death and troops tried to enforce a lockdown for a third day in most parts of Srinagar.
Senior separatist leaders were either jailed or confined to their homes as shops and businesses in Srinagar were closed and public transport stayed off the roads for a sixth day.
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