The Gulf state's interior ministry announced the death of the 45-year-old on Twitter on Thursday, saying he died while exercising at Jaw prison, south of Manama.
It attributed Mohammed Sahwan's death to natural causes, but relatives claimed he died as a result of injuries sustained during the crackdown on the 2011 Shia protest movement which called for reforms to the Sunni monarchy.
Sahwan's relatives said his head and body still contained buckshot from injuries sustained during the protests six years ago.
After Friday's funeral in the village of Sanabes near the capital, demonstrators tried to march on the site of the Pearl roundabout, the epicentre of the 2011 protests.
Police fired buckshot and tear gas to disperse them, witnesses said.
Sunni-ruled Bahrain has been rocked by unrest since March 2011, when authorities – backed by Saudi forces – put down a month of protests led by the Gulf state's marginalised Shia-majority demanding democratic reforms, including a constitutional monarchy and an elected prime minister.
Since then, hundreds, including influential community leaders, scholars, lawyers and internationally-recognised activists have been arrested and put on trial, while others have been stripped of their citizenship.The Gulf kingdom's largest opposition party, al-Wefaq was the hardest hit in the crackdown and its leader Sheikh Ali Salman has been behind bars since 2014 after being convicted of "inciting hatred".