The death of the 29-year-old monk, who campaigners said drank petrol before setting himself alight, came five months after a similar incident in a nearby area triggered protests and a huge security crackdown.
"There are at least 1,000 soldiers and police guarding the monastery and about 100 monks inside," one monk said over the phone from inside the Nyitso monastery in Sichuan province's Daofu county on Tuesday, not far from Tibet.
"The power and water have been cut off for days, and we have no food supplies coming in."
The London-based Free Tibet rights group cited local contacts as saying authorities had cut off water and power supplies to the monastery after monks celebrated the Dalai Lama's birthday on July 6 despite a ban on doing so.
The monk, called Tsewang Norbu, set himself on fire after drinking petrol and spraying himself with the flammable liquid, the group said.
He was heard calling out "We Tibetan people want freedom", "Long live the Dalai Lama", and "Let the Dalai Lama return to Tibet" before he died, the group said, quoting local contacts.
Sichuan has a large population of ethnic Tibetans, many of whom object to what they say is repressive Chinese rule -- a claim Beijing denies.
The Dalai Lama, Tibet's exiled spiritual leader, fled China in 1959 after a failed uprising against Chinese rule, and is now persona non grata in the Asian nation.
Tsewang Norbu's self-immolation was the second reported such incident this year in this area of Sichuan, which has experienced sporadic bouts of unrest.
In March, a young monk called Phuntsog set himself on fire and died near Kirti Monastery in Aba county, around 200 kilometres (124 miles) from Daofu, in apparent protest against the government.
Monks and civilians staged a protest after the incident, prompting an immediate crackdown on the monastery in which exile groups say two Tibetans died. The restive area was closed to foreigners.
Phelim Kine, a senior Asia researcher for the New York-based Human Rights Watch, told AFP there appeared to be a pattern for the way authorities dealt with unrest in Tibetan areas.
"This includes isolating the area and demanding that its inhabitants comply with government directives, with defiance of those directives reaping severe punishments," he said.
Hotel and restaurant owners in Daofu said there was a heavy army and police presence in the city, adding they were not accepting foreigners.
"There are many soldiers and police on the streets, they have surrounded the monastery and the government headquarters," said a hotel owner, speaking on condition of anonymity.
A restaurant owner said the police and army had set up roadblocks around the county and were checking every vehicle that approached the government headquarters and the monastery.
An official at the Daofu government office refused to comment.
Many Tibetans in China are angry about what they view as increasing domination by China's majority Han ethnic group, and accuse the government of trying to dilute their culture.
This resentment spilled over into violent demonstrations in March 2008 in Tibet's capital Lhasa, which then spread to neighbouring areas including Sichuan. Authorities have increased security in the region since then.
China however says Tibetan living standards have improved markedly in recent decades, pointing to the billions of dollars in spending on infrastructure and development projects.
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