The lunchtime blast on Sunday destroyed the Zanbour restaurant located near the heavily guarded Green Zone in the heart of Baghdad where most US and Iraqi officials live and work.
Seven policemen were killed in the blast and another 16 wounded.
Twenty others were also wounded, but their identities were not immediately known.
Iraq's al-Qaida organisation, led by Abu Musab al-Zarqawi, purportedly claimed responsibility for the attack, the worst in the city since the start of a month-long crackdown on insurgents.
The restaurant bombing came on the heels of a car bomb attack on a police convoy near a Shia mosque in Baghdad in which at least two people were killed and 26 wounded, according to an Interior Ministry official.
More Baghdad bombings
The bomb went off near Husainyat al-Nuwab mosque on Aden Square near the predominantly Shia district of Kadhimiya in the north of the capital.
The ministry source said the convoy was most likely to have been the target as the mosque suffered minimal damage. At least five cars were seen ablaze.
Also in Baghdad, two policemen were gunned down as they left their home in the western al-Iskan neighbourhood for work, said a Defence Ministry spokesman.
A further two Iraqis were killed and two others wounded when unknown assailants fired at vegetable and fruit vendors, police said.
The dozens of dead and wounded underscore the strength of the fighters in Iraq even as US-led forces fight rebels in operations in the west of the country near the Syrian border.
Elsewhere, three Iraqi soldiers were killed and 13 wounded in a car bombing outside a former palace of deposed leader Saddam Hussein in Tikrit now used as a US military base.
Five other people, including two Iraqi contractors and a truck driver, were killed in other incidents in the Tikrit area.
For many in Baghdad, daily life
has become a living nightmare
Another Iraqi was killed and eight wounded when mortar rounds intended for the provincial authority headquarters in Mosul hit a busy commercial street, hospital and security sources said.
Meanwhile, the Interior Ministry source said seven bodies of Iraqi civilians were found on Friday in a rubbish dump in the capital's Ammariya neighbourhood.
In Hindiya, near the central city of Karbala, fighters stormed the home of Jasim Muhammad Musalat, a former member of the Baath party, and killed him.
It was the second attack of its kind in three days in the area. In the previous attack, assailants dressed as Iraqi policemen gunned down another former senior Baathist in the region.
The head of Babil province's anti-corruption unit, Ahmad Abd al-Razaq, was wounded in an assassination attempt as he travelled from Hilla to Najaf, police said.
Deputy speaker Husain al-Shahristani said Kurdish female lawmaker Pakiza Mustafa Ahmad was wounded in an assassination attempt, while the brother of another female deputy, Intisar al-Umari, was killed in Mosul.