Three other people were also reported wounded and six houses were damaged in the town of Hibhib, north of Baghdad, after a US artillery unit fired a 155mm round during training, a US statement said on Sunday.
"Accident in Diyala (province) kills three, injures three," the statement's headline said.
The incident came at a sensitive time for Iraqi-US relations.
The new Iraqi prime minister, Nuri al-Maliki, said last week he was losing patience with reports of US killings of Iraqi civilians "by mistake".
The US military statement said a self-propelled howitzer fired the round from a base near the bigger regional town of Baquba, 65km north of the capital.
"A short time later Iraqi police reported an explosion at a building in the town (Hibhib) that killed two Iraqi civilians, injured four others and damaged six houses," the statement said.
One of the wounded civilians was evacuated to a military medical facility but later died, it added.
Just two weeks after al-Maliki took office, relations between his government and the US appear to have been soured by accusations of US troops killing Iraqi civilians.
Al-Maliki told Reuters in an interview last week: "We are worried about the increase in 'mistakes' ... I am not saying that they are intentional. But it is worrying for us."
Last Wednesday, a joint Iraqi-US security body said US forces had killed "by mistake" two women who were en route to a maternity hospital north of Baghdad.
The US military is also under pressure over accusations that US marines may have killed 24 civilians in the western Iraqi town of Haditha last November.
The US military separately reported on Sunday that Iraqi soldiers had detained 19 "terrorists" during a search operation in eastern Baghdad on Saturday.
One of the detainees "reported having difficulty breathing" and died of a heart attack, it said.