Twenty others were injured in Friday's attack, hospital officials said.
"An hour and half ago (8.30pm -1730 GMT), someone threw a grenade onto the stall in Bayaa Street and ran off," said Zaher Turki, head of security at the main hospital in the Yarmuk district of the capital.
Turki said there had been threats against several alcohol shops in the area, a mixed neighbourhood of Sunni and Shia Muslims where the influence of firebrand Shia preacher Muqtada Sadr runs high.
He said an 11-year-old boy was among the dead. Policemen at the hospital said two of their colleagues who happened to be nearby were among the wounded.
A shop owner in Bayaa Street, Ahmad Hussein, said warnings from people he described as "Islamists" against alcohol stalls have increased during Ramadan.
The grenade was hurled at a group of six stalls on a sidewalk corner, added Ahmad, who owns an electronic games shop.
"They opened after the fall of the regime of Saddam Hussein (in April)," he said. "I don't think they will open tomorrow."
Under Saddam, Iraqi Christians were the only citizens permitted to sell alcohol. The trade would attract day trippers from neighbouring Kuwait, which has a complete ban on alcohol.
In a May attack, two Christian alcohol sellers were shot dead in Basra.