The bomber struck on Tuesday on a busy commercial street in Kirkuk, a mixed Arab, Kurdish and Turkmen city 290km north of Baghdad.
About half the dead were police officers who rushed to the scene after attackers opened fire on policemen.
Another 24 people were wounded in the attack. the latest in a series that have killed more than 160 Iraqis since Friday, most of them Shia.
Earlier in the day, fighters fired a mortar shell at a ceremony marking the transfer of control of one of Saddam Hussein's palaces in Tikrit from the US military to the Iraqi government.
Television footage showed an American colonel ducking for cover as the shell whistled overhead.
Fearing more were on the way, US security hustled ambassador Zalmay Khalilzad and the US commander in Iraq, General George Casey, into the palace while American soldiers and an Apache attack helicopter searched for the source of fire.
Khalilzad (R) and Casey (in army
fatigues) escaped a mortar shell
The ceremony resumed a few minutes later.
Late on Tuesday, US Secretary of State Condoleezza Rice indicated that conditions for a gradual US troop pullout from Iraq could be in place "fairly soon", but warned that a decision would not be made unilaterally.
Appearing in two separate TV interviews, Rice said the possibility of handing over to Iraqis important security responsibilities and of US force reductions was being constantly discussed in Baghdad by Casey and Khalilzad.
Speaking on CNN, she said the number of international soldiers in Iraq "is clearly going to come down" because, in her opinion, "the American forces are not going to be needed in the numbers that they are there for all that much longer".
About 159,000 US troops are currently deployed in Iraq ahead of a 15 December vote that is expected to produce the country's first democratically elected government. Saddam's government was overthrown in April 2003.
In other incidents across Iraq on Tuesday, three security guards were killed by armed men in al-Ghadir, 10km west of Karbala, a police source said.
Condoleezza Rice says US troops
reductions could come fairly soon
In the western city of Ramadi, the capital of al-Anbar governorate, three policemen were shot dead by unknown assailants, and unknown attackers killed former intelligence officer Abd al-Wahab al-Dulaimi in his home in Ramadi, a police source said.
Two other US officials on a trip in Baquba were also exposed to the country's instability.
A convoy transporting embassy staff and a high-ranking Iraqi election official was hit by a small makeshift bomb, witnesses and officials said.
Izz al-Din al-Muhammadi, chairman of the board of directors of the Independent Electoral Commission of Iraq, was in the middle of the convoy with the embassy officials when the manually detonated bomb went off.
No one was hurt but one US military Humvee was slightly damaged.
"Thank God we are alive," al-Muhammadi said.