More than 100 people were also wounded in the Tuesday morning blast – the most lethal in the country in two months.
Shrapnel tore through the crowded district in Haifa Street, littering body parts everywhere and leaving pools of blood on the pavement.
Officials said the blast targeted aspiring recruits queuing up for jobs with the Iraqi police.
"More than 200 people were queuing outside the main gate. I came with six friends and now I am alone. They have gone, all of them," said Nabil Muhammad, slightly wounded in the blast.
Officials blamed the carnage on at least two car bombs.
Witnesses said hundreds of people had been quietly going about their business in the rebel stronghold of Haifa Street
when at least one car blew up.
Several other blasts rocked the
capital on the day
A string of other explosions also rocked the Iraqi capital during the violent day.
A person was killed and another wounded when a blast at Khalani square in eastern Baghdad targeted a civilian convoy.
A witness, Thamir Jasim, said the blast occurred while several sport utility vehicles, favoured by westerners, passed by. One vehicle caught fire while others managed to flee the scene.
Another loud explosion was heard at al-Muthanna airport and columns of smoke were seen rising from the site.
Yet another blast shook al-Bab al-Sharqi area of the capital and medical sources told Aljazeera ambulances had rushed to the area.
Later in the day, a series of explosions, thought to be from rockets, struck the interim government and US embassy enclave in the city, a US officer said.
Charred and bloodied
But by far the most devastating, the blast outside the police headquarters left the crowded neighbourhood smouldering.
A blast in Khalani in eastern
Baghdad targeted a US convoy
Rescuers pulled bodies out of mangled market stalls. The area was littered with shoes, clothes and body parts, as well as scattered fruits and vegetables from the market.
"I saw a black blast and then bodies scattered around me," said Umar Salim, a 12-year-old boy, riding his bicycle through the maze of charred and bloodied corpses.
"I have never seen so many bodies before," he said, without discernible emotion.
Angry crowds denounced US forces and interim Iraqi Prime Minister Iyad Allawi’s government for failing to protect police recruiting centres.
"Such places were targeted before," said Ali Abu Amir, who was among those trying to join the force, but had gone around the corner to buy a drink when the explosion went off.
"I blame Iyad Allawi's government for what happened because they did not take necessary security measures," he said.
Further violence in Baghdad claimed the lives of two US soldiers. Three soldiers were also wounded when a patrol was ambushed in the city.
"I blame Iyad Allawi's government for what happened because they did not take necessary security measures"
Witness, Ali Abu Amir
Iraqi analyst Dr Hani Ashur told Aljazeera he believed the attack was in response to escalating use of force by the US army.
"Iraq should be turned into a negotiations field, rather than a conflict one," Ashur said. "This cannot be achieved unless all US military operations targeting Iraqis are halted."
He said the continuous use of force by US troops "encouraged armed groups to carry out more operations in other areas believed to be more safe".
The ordinary Iraqi citizen, he added, is "naturally the victim in all of this. The more violence is used, the more Iraqi citizens lose faith and trust in the future," said Ashur.