Police, quoting witnesses, said the blast occurred late on Tuesday night after evening prayers at al-Kebir mosque in Jalowla, near the Iranian border.
Six of the wounded were in a serious condition.
Police said a bomber may have been inside the mosque preparing for an attack when the explosives detonated prematurely. He was identified as a local man, Abbas Ahmed al-Sumaidai. Police later arrested two of his brothers.
The blast comes at a time of growing sectarian tensions between Shia and Sunni Muslims.
Sunni fighters have mounted several bombings in or near Shia mosques in a campaign designed to topple Iraq's new Shia-led government.
There have been few reports of attacks on Sunni mosques.
Sunni Arabs dominated Saddam Hussein's government, but boycotted or stayed away from January elections, which were swept by Shia and Kurds.
Aid workers killed
Also in Iraq on Tuesday, armed men killed four Iraqi human rights activists in Baghdad.
The office of the International Organisation for Human Rights that was attacked is in the neighbourhood where Egypt's top diplomat to Iraq, Ihab al-Sherif, was kidnapped this month by al-Qaida in Iraq. The group said in an internet posting that it killed al-Sherif several days later.
Armed men entered the office and opened fire, also wounding one member of staff, according to a member of the organisation, Jamal Ibrahim.
Most foreign human rights and aid workers have fled Iraq for fear of abductions and killings.
On Wednesday morning, armed men killed an Iraqi soldier while he was driving his car in western Baghdad, police said.
In another development, the commander of a Rapid Intervention Forces unit in Diyala province, Colonel Shalan Abd al-Khaliq, died of injuries he sustained a few days ago when fighters attacked his car.