The US Army AH-64 Apache attack helicopter crashed in a field and burst into flames at about 11.45am on Monday in al-Mashahda, 30km north of the capital.
Iraqi journalist Ziyad al-Samarai told Aljazeera that the aircraft was hit by a rocket in the farm-rich area.
The journalist said a meeting of officials was being held in al-Mashahda police station at the time and US military vehicles and helicopters had surrounded the area.
Al-Samarai reported that the rocket directly hit the helicopter and downed it immediately, adding that columns of smoke could be seen rising from the crash scene as US forces sealed off the area.
Two civilians killed
Meanwhile, a roadside explosion has claimed the lives of two Iraqi civilians in Baghdad.
The bombing, in which two explosive devices were used, hit a police patrol at Antar Square in the capital's northern Azamiya district on Monday, according to police Lieutenant Muhammad al-Hayali.
A husband and wife were killed and another person was wounded, he said.
AMS member arrested
In other developments, Aljazeera has reported that an Iraqi contractor working with the US Army was killed by unknown assailants in the Dora area, south of Baghdad.
Three Iraqi nationals, too, were killed in a barbershop when unidentified attackers opened fire at them and blew up the shop in the new Baghdad area.
And The Association of Muslim Scholars in Iraq (AMS), a Sunni Muslim group, has issued a statement saying that Iraqi police commandos raided the al-Dakhiliya mosque and arrested Shaikh Omar Raghib, a member of the group.
The Azamiya car bomb killed
The AMS said it holds the interim Iraqi government responsible for any harm done to Shaikh Omar, and considers this an attack against the AMS itself.
The AMS has been outspokenly critical against what it considers the US occupation of Iraq and has called the interim Iraqi government illegitimate.
It was not immediately possible to confirm the arrest with the Iraqi authorities.