The blast ripped through a crowded shopping street near al-Samarrai mosque in southern Baghdad on Friday, medical and military sources said.
Witnesses said one or two US troops were also wounded in the blast.
Karim Abd Allah Muslim, head of the emergency room at the
al-Kindi hospital, said: "About 10am this morning we received three dead, who have not been identified and 13 wounded.
"Two or three of them are seriously wounded. The rest are slight injuries. "A woman was among the dead and three women were also wounded. Two children were lightly injured."
Witnesses said the blast happened as a US convoy was passing and reported seeing at least one US soldier covered in blood and as many as three hurt before the convoy drove away.
Sweets seller Ahmad Ali, 30, said he saw two American vehicles pass by his shop.
"I saw one American soldier badly wounded and covered in blood."
"When it exploded the street was blocked with traffic. People in a small truck were killed or wounded as well as some passers-by. The place was packed and all shops open and people selling their wares on the pavement."
A US soldier walks under a flyover
close to the attack site
"It's a cowardly act," he said. "They hurt one American but they killed and wounded far more Iraqis."
He said Iraqi volunteers and ambulances ferried the casualties
to nearby hospitals while the US convoy drove off.