A hospital source said the bus was taking about 20 policemen to a Kurdish city in the north for training when the attack took place on Monday.
The area around Baquba, 65km northeast of Baghdad, has been a focus of fighting by those opposed to the US-led forces in Iraq, with frequent attacks against Iraqi security forces and civilians.
An armed group stormed a police checkpoint with rocket-propelled grenades and mortars in a small town near Baquba a week ago, killing five policemen and wounding four.
Poorly equipped Iraqi security forces are a target for assaults by armed groups such as al-Qaida in Iraq, which have stepped up their campaign after largely peaceful elections two weeks ago.
US contractors killed
Four US civilian contractors were killed on 1 January in a vehicle accident at an air force base in Iraq's western al-Anbar province, the US military said.
The contractors were travelling in a bus which was hit by a 7-tonne truck at al-Asad air base, the military said.
Another 18 civilians were injured, nine of them taken to hospital, it said, adding that eight of them were medically evacuated to Baghdad and the ninth was taken to a combat hospital north of Baghdad.
One marine was also slightly injured in the accident, which is being investigated.
The names of the dead and injured were being withheld pending notification of next of kin, the military said.