Retired High Court judge Justice J K Jain would chair this Commission of Inquiry.
"The commission headquarters will be at Indore and it will submit its report in three months," a state public relations department official said.
The commission will find out, among other things, the circumstances under which the firing incident took place and whether the force used by the police was reasonable under prevailing circumstances or not, and if not, who was responsible for this.
The commission will also suggest ways to prevent such incidents in the future, the official said.
The farmers' protest in Madhya Pradesh, which began on June 1, took a violent turn on June 6, when five persons were killed in the police firing at Mandsaur.
Subsequently, the farmers' protest witnessed bandh and arson as the agitation spread to other districts of western Madhya Pradesh including Neemuch, Dhar, Ratlam and Jhabua.
Chief Minister Shivraj Singh Chouhan had launched an indefinite fast here on Saturday with an appeal for peace and met farmer leaders.
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