At least 143 people were killed and dozens wounded, Coalition officials said.
There were varying reports on the cause of the blasts. Stunned witnesses blamed suicide bombers or planted explosives. But a U.S. military spokesman in Baghdad and an Iraqi police spokesman in Karbala reported that mortars were fired at the shrines.
U.S. intelligence officials have long been concerned about the possibility of militant attacks on the Ashoura festival, and coalition and Iraqi forces bolstered security around Karbala and other Shiite-majority towns in the south during the pilgrimage.
Last month, U.S. officials released what they said was a letter by a Jordanian militant outlining a strategy of spectacular attacks on Shiites, aimed at sparking a Sunni-Shiite civil war.
In Pakistan, armed men opened fire on Shiites marking the holiday, killing at least 29 people and wounding 150 others. It was unclear if the attack was connected to the incidents in Iraq.
In other developments:
Ashoura is Shiites' most important holiday. It commemorates the death of a Shiite saint, Imam Hussein, who was a grandson of the prophet Muhammad. He was killed during a power struggle in 680. His death is a key event that split Islam into the Shiite and Sunni factions. In Pakistan, the festival is called Muharram.
Tuesday's blasts in Karbala struck near the golden-domed shrine where Imam Hussein is buried, in a neighborhood of several pilgrimage sites. After the blasts, Shiite militiamen tried to clear the terrified crowds, firing guns into the air. Two more blasts went off about a half-hour later.
"We were standing there (next to the mosques) when we heard an explosion. We saw flesh, arms legs, more flesh. Then the ambulance came," said Tarar, an 18-year-old, giving only one name.
The blasts in Karbala killed 31 people and wounded 100 others, Iraqi police officer Muhammed Saad said.
Two armed Iraqi policemen broke down in tears as they walked through the bomb site.
Iraqi militia initially tried to control the crowd and arrested two men the crowd attempted to lynch. Rumors swirled throughout the city as to the cause of the blasts, ranging from mortars fired from outside the town to suicide bombers in the crowd.
Loudspeakers from the mosques continued to broadcast recitations from the Quran, only briefly interrupting the Ashoura commemoration to ask the crowd to part so that ambulances could move through the crowd. The mosques were not damaged by the blasts.
The Kazimiya blasts went off inside the shrine's ornately tiled walls and outside in a square packed with street vendors catering to pilgrims. The courtyard inside the shrine was strewn with torn limbs.
Officials at three hospitals reported 50 killed in those blasts. Deputy Interior Minister Ahmed Kadhum Ibrahim told CNN that 56 were killed and 230 wounded in Baghdad. The U.S. military put the Baghdad death toll at 10, with 100 wounded.
Hundreds of gunmen swarmed inside and outside the walled shrine as men wept. A U.S. helicopter hovered over the shrine. Black mourning banners traditional in Ashoura celebrations hung in tatters.
Anger swelled among the survivors. Hundreds of arguments broke out. Some people blamed the Americans for stirring up religious tensions by launching the war. Others blamed al Qaeda or Sunni extremists.