New York City's new Mayor Bill de Blasio refused to join the city's annual parade, and Guinness has withdrawn its sponsorship.
Parade organisers said gay groups are not prohibited but may not carry identifying banners.
Boston Mayor Martin Walsh also skipped his city's parade on Sunday.
Mr de Blasio has said he would not join the parade in protest against its long-standing policy of excluding gay Irish groups from marching openly.
The New York mayor played host to Irish Prime Minister Enda Kenny for a St Patrick's Day breakfast before the parade.
Mr Kenny joined the procession down Fifth Avenue in New York City's Manhattan borough on Monday, after saying the holiday was about Irishness, not sexuality.
On Sunday, Irish beer brand Guinness said it was dropping its participation in the New York parade.
"Guinness has a strong history of supporting diversity and being an advocate for equality for all," the brand said in a statement issued by parent company, Diageo.
"We were hopeful that the policy of exclusion would be reversed for this year's parade."
The firm pulled any promotional materials that were not already printed, although the beer maker had already made a payment to parade organisers, spokeswoman Alix Dunn said.
Some gay and lesbian groups protested along the parade route on Monday, while a plan to dump Guinness beer from the shelves of the Stonewall Inn, the birthplace of the gay rights movement in New York City, was cancelled after the company pulled out of the parade.
New York's parade draws more than one million spectators and about 200,000 participants during the St Patrick's Day holiday.
On Friday, two other major beer brands, Boston-based Sam Adams and Heineken, also dropped parade sponsorships.
In Boston, Mr Walsh, the first Irish-American Boston mayor in 20 years, said: "So much of our Irish history has been shaped by the fight against oppression.
"As mayor of the city of Boston, I have to do my best to ensure that all Bostonians are free to participate fully in the civic life of our city."

Anglesey council's contract for 17 toilets ends in 2017 and they face being scrapped due to budget cuts.
A letter has been sent to councils to see if there is interest in taking them over from 1 April.
Councillor John Roberts said: "We don't want to reach a situation where we'll have to close toilets and sincerely hope that we can find a solution."

At least 183 procedures have been cancelled at hospitals across the north-east since the beginning of November, the health board said.
They include 13 procedures due to take place at Aberdeen Royal Infirmary since 1 January.
The health board blamed "staffing challenges and winter pressures, not budgetary constraints".
It said it had problems filling vacancies due to complex training requirements of theatre nursing but procedures were only rearranged as a "last resort".
A patients' group raised concerns that elderly patients were being affected disproportionately because of the lack of staff with specialist skills.
The Patient Action Co-ordination Team, which provides support to patients in Grampian, said orthopaedics and eye surgery for conditions such as cataracts are among those worst affected.
It said that because these are ailments which predominantly affect older people, they are worst affected by the number of cancellations.
The patients group also warned that the cancellations will affect the north-east health authority's waiting time target performance.
Dr Annie Ingram, director of workforce at NHS Grampian, said: "We've made huge progress over the last year but, like other public sector organisations in Grampian, we face challenges in recruiting."
"We apologise to any patients whose procedures have had to be re-scheduled."
She said that around 30,000 operations are carried out every year in the region and the number which are postponed is usually between 1 and 2%.
"Rearranging elective procedures is a last resort for us and is done according to clinical prioritisation: our most clinically urgent patients will still be seen," she added.
"When providing staff for a theatre list of operations on any given day, the theatre nurses must meet the needs and skills required for that speciality and have enough knowledge to act as a skilled practitioner to maintain safe practice.
"Vacancies have been difficult to fill due to the requirement to try and train staff in what is  a complex area of nursing.
"Normally when staffing is at a sufficient level, staff rotate specialties, gaining more knowledge and skills in a variety of different areas and subsequently building more resilience into the service."
The world's largest St Patrick's Day parade has kicked off under a cloud of protest against the organisers' refusal to allow gay groups to march openly.
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Public toilets on Anglesey are being offered to town and community councils in a bid to stop them being closed.
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NHS Grampian has had to cancel routine operations because of a shortage of theatre nurses.