Mirwaiz Umer Farooq, chairman of the separatist moderate Hurriyat group, has called the shutdown, demanding the Indian Army vacate central Kashmir's Tosa Maidan firing range.
The protest is also against the state government's alleged extension of the army's lease in the Tosa Maidan forest.
Farooq is under house arrest in his uptown Nigeen residence in the city.
Pedestrian and traffic movement was stopped except for emergencies in Khanyar, Safa Kadal, Rainawari, MR Gunj and Nowhatta areas.
Contingents of police and paramilitary Central Reserve Police Force (CRPF) in full riot gear have been deployed.
The authorities did not impose any restrictions in the uptown areas of the city, but shops, public transport, other businesses and educational institutions remained closed.
Banks, post offices and government offices functioned normally even though the attendance was thin due to non-availability of public transport.
The state government has said the army would be allotted alternative land for the firing range, while the army asserts they would vacate only after an alternative range is allotted.