A blast early on Saturday left a dome, designed to be the centre piece of the al-Rasul al-Karim mosque, in ruins along with the mosque's brick walls.
The unfinished mosque was situated in the Ghazalia neighbourhood, a mainly Sunni area.
Four explosives charges caused massive damage to several cement pillars around a prayer room, some 600 square metres large.
"The destruction of the al-Rasul al-Karim mosque is designed to ruin the good harmony between members of the two communities," said Hussain Tala, one of the people working on the construction.
The attack is the latest in a series of violent acts against members of Iraq's Shia and Sunni population, raising fears of communal strife.