The dead included two children, hospital officials said.
At least five cars were destroyed in the blast on Rashid street, a busy commercial part of the city centre.
The Iraqi government said the blast was caused by a falling shell, not a car bomb as they had previously stated.
"The place was very crowded, it is a commercial area ... Casualties are being taken to hospital now," an Interior
Ministry official said.
The blast boomed through the centre of the capital at 11.25am (0725 GMT) on Tuesday, near the Hadir Khana mosque as the third and last day of a key national conference began in Baghdad.
In all, three mortar bombs exploded in central Baghdad, two striking a business district and the third falling metres from where the conference was under way, police said.
Police cordoned off the area after
The bombs were launched from the western bank of the Tigris river, sending smoke spewing into the sky on the eastern bank.
Fire engines and ambulances screeched through the streets to the scene as police cordoned off the area.
Another bomb fell inside the heavily fortified compound known as the Green Zone, the seat of the interim government and US embassy, near the convention centre where the conference began its final day.
The explosions came as the conference, held in central Baghdad's Green Zone, was due to elect a 100-member assembly to oversee elections.
Fighters on Sunday fired several mortar bombs near the Green Zone as the conference opened. Two people were killed in that attack.