Iraqi interim interior ministry spokesman Colonel Adnan Abd al-Rahman said two car bombs and a roadside bomb exploded on Thursday in swift succession as a US convoy was passing through Baghdad's al-Amal neighbourhood.
Hospital officials said that at least 37 people were killed in the attack - most of them children, while another 127 were wounded.
Ten US soldiers were also wounded in the attack.
Witnesses said many of the dead and wounded were attending a ceremony commemorating a new sewage system.
The blasts occurred as fighting raged between US troops and Iraqi fighters near Abu Ghraib prison. There were no immediate reports on casualties, but sources told Aljazeera that US forces had closed all roads leading to Abu Ghraib.
US soldier killed
The three blasts follow an earlier car bombing that killed one US soldier and two Iraqi policemen, and wounded 10 Iraqis and three US soldiers.
US forces sealed off the area after
the blasts in the al-Amal district
The bomb exploded near a checkpoint at a crowded intersection in Abu Ghraib, just west of Baghdad.
A doctor at Abu Ghraib hospital, Muhammad Safaa al-Din, said 60 people had been wounded in the blast, including 15 children and 10 women.
Another US soldier was killed in a separate incident when a rocket hit a US logistics base near Baghdad.
The confirmed deaths of the two soldiers raise the US toll in Iraq to at least 1056 since Iraq was invaded in 2003.
No accurate figures for Iraqi civilian casualties have been kept, although the toll is believed to be just under 40,000.
Attacks in Iraq are mounting just four months before nationwide polls and a few weeks before the US presidential election in November.
Attacks on US troops have doubled to around 80 a day in the past month.