Witnesses said a fuel truck exploded next to a building in southern Mosul that US troops have occupied since last month.
After the blast, heavy machinegun fire could be heard in the area and warplanes flew overhead. There was no immediate word on casualties.
Ruaa Ahmad, an independent Iraqi journalist in Mosul, said half of the building collapsed following the huge explosion.
"An eyewitness also confirmed that another car bomb exploded outside the building," she said.
"There has not been any information about anybody arrested or suspects as the area has been completely sealed off."
The US military has acknowledged that security has
deteriorated badly in Mosul and says more US troops will be sent there before 30 January elections.
Last month, anti-US fighters overran several police stations in the city and looted them of weapons and equipment.