New York City's new Mayor Bill de Blasio refused to join the city's annual parade, and Guinness has withdrawn its sponsorship.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."
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.