The 16 were Iraqi government workers being ferried from an Industry Ministry facility to their homes on Tuesday.
The armed men in two cars followed the buses and opened fire, also wounding 27 passengers, officials said.
"We were on the bus going home. Two cars with about 10 insurgents opened fire on us. We don't know why. We are just workers," said Adil Zamal, being treated for gunshot wounds at the Al Noor hospital.
"We fell to the floor. They just kept shooting and shooting until they ran out of ammunition," he said.
US soldiers killed
Elsewhere in the capital, a roadside bombing killed four American soldiers on Sunday, a statement by the US command said on Tuesday.
The soldiers from Task Force Baghdad died on Sunday night when their vehicle ran over a roadside bomb in the southwest of the city, the statement said, giving no further details.
Jim Driscoll, a spokesman for the Georgia National Guard, said the victims were assigned to the 48th Infantry Brigade.
Iraqi Defence Minister Sadoun al-Dulaimi on Tuesday accused Syria of ignoring complaints about the infiltration of armed groups from Syria into Iraq.
Al-Dulaimi accused Syria of
Al-Dulaimi said there were three routes used by armed men to enter Iraq. The first extends from the northern sector to Tal Afar and then veers south across Kirkuk to Baghdad.
The second route, he said, begins near al-Qaim city and runs parallel to the Euphrates River to Falluja and Abu Ghraib. The third route, he added, passes along the border between Iraq, Jordan and Syria.
Syrian Foreign Minister Farouk al-Sharaa said al-Dulaimi's accusations were untrue.
In other developments on Tuesday, al-Qaida's Iraq wing, led by Jordanian-born Abu Musab al-Zarqawi, purportedly released a video of two kidnapped Algerian diplomats it vowed to kill.
One of the two blindfolded men identified himself as Ali Belaroussi, Algeria's mission chief.
A statement accompanying the video said the diplomats' "confessions" would be posted soon. In another statement, the group vowed to kill them and said this would be "the fate of the ambassadors and the envoys of all infidel governments".
Also on Tuesday, the Association of Muslim Scholars in Iraq appealed to the diplomats' abductors not to execute them.
The association said in a statement that its appeal was based on the strong opposition of the Algerian government to the occupation of Iraq and its repeated calls for the withdrawal of troops from Iraq.
The kidnappers have vowed to
kill the Algerian diplomats
The al-Qaida group earlier this month issued a similar video of Egypt's mission chief and said it had killed him.
The US-backed government says the violent campaign against diplomats was intended to prevent Iraq from improving ties with its neighbours.
Several countries have reduced their presence in Baghdad because of attacks this month, and no Arab country has given its envoy in Baghdad the full status of ambassador.
In other violence, two police officers were killed by a mortar in Baghdad's southern outskirts, and three more were killed by a rocket attack in Hilla, a town farther south, police said.
An aide of Shia cleric Muqtada al-Sadr was shot dead while stepping out of his car in Baquba, north of Baghdad. A paramedic and an Iraqi woman were killed during clashes between the Iraqi army and assailants in Mosul.
Three Ministry of Health workers were shot dead in their car in the capital's eastern New Baghdad district. Armed men killed a Pakistani truck driver in Tikrit, and a police officer and a child were killed by armed men in central Basra.