Also on Wednesday, six US troops were killed, including two in a helicopter crash west of the Iraqi capital.
Interior Ministry officials said a car bomb struck outside a Shia mosque in the town of al-Musayyib, killing at least 23 people and wounding more than 60.
The attack came on the last day of the Muslim holy month of Ramadan as people prepared for the three-day Eid holiday, which is to start on Thursday.
The mainly Shia town of al-Musayyib, south of Baghdad, has been hit by several attacks, including one in July when a bomber blew up a fuel truck, killing 98 people and wounding 75 more.
"They want to kill people before the feast," said Nagat Hassoun, 50, who lives a few hundred yards from the blast site. "They want people to stay at home and live in a tragedy. The aim is to cause sabotage. They're targeting the Shia."
"The insurgents wanted to cause as many casualties as possible," police Captain Muthanna Khalid told an Associated Press reporter.
There was no claim of responsibility for the attack, the third major vehicle bombing in a predominantly Shia area of Iraq within the past five days. Fifty people had been killed since Saturday in car bombings in Basra and a Shia village in central Diyala province.
Those attacks have fueled fears of more sectarian tension between Shia and Sunni Arabs.
Two US marines were killed in a helicopter crash in western Iraq during the day.
The marines died when their Super Cobra helicopter crashed on Wednesday outside the defiant Sunni Arab city of Ramadi, the US military said.
The helicopter "was flying in support of security and stabilisation operations", a statement said. The cause of the morning crash was still under investigation.
US helicopters often draw enemy
fire from the ground in Iraq
Eyewitnesses in Ramadi, capital of Anbar province 115km (70 miles) west of Baghdad, said the helicopter came under fire from the ground before it crashed.
The helicopter came down in the Albo Ubaid district. US forces quickly cordoned off the area while more helicopters flew overhead.
A US marine and sailor also were killed when a roadside bomb exploded near their vehicle in Ramadi.
Sporadic clashes occurred throughout the night and into Wednesday, residents said. Associated Press Television News video from the city showed a burning civilian vehicle and what appeared to be a destroyed US Humvee.
A crowd of Iraqis gathered at the site, and one man, waving the remnants of a US M-16 rifle in the air, claimed the attacks caused US casualties.
In Balad, 80km north of Baghdad, a US soldier was mortally wounded when his patrol came under small arms fire. The sixth fatality was a soldier from the US Army's Task Force Baghdad who was killed by a roadside bomb on Wednesday in a southern district of the capital, the military said.
The latest deaths follow the fourth-deadliest month for
American troops since the US-led invasion of Iraq. Most
of the 95 Americans killed in October were victims of
Iraqi soldiers killed
In another incident, nine Iraqi soldiers were killed in two explosions targeting their patrol in southeastern Baghdad, Aljazeera has learned from Iraqi police.
US deaths in October reached 95
Nine other soldiers were wounded in the blasts.