Police sources said the bomber blew himself up when he was stopped at a checkpoint as he was heading to the Imam Ali shrine.
At least 40 people were wounded in the blast which was near the entrance to a market.
The city that is sacred to Shia Muslims from around the world has been hit before. US and Iraqi officials say the attacks are designed to trigger a sectarian civil war.
Najaf is mostly Shia and is 160km south of Baghdad. It has been relatively stable compared to other parts of Iraq, where fighters have maintained a campaign to oust the US-led forces and topple the US-backed government of Nuri al-Maliki, the prime minister.
More US troops
The US has boosted its troop levels in Baghdad in another attempt to ease sectarian violence and build confidence in the new Shia-led government.
Maliki has pledged, since coming to power more than two months ago, to disarm rival militias and bring the various sects together, but violence keeps raging.
Almost 2,000 bodies were brought to the Baghdad mortuary in July, the highest number in five months in a grim demonstration of the scale of violence now in the capital.
It was the largest monthly toll since the aftermath of the February bombing of the Shia Golden Mosque of Samarra, which triggered a rise in sectarian killing.
About 6,000 additional Iraqi forces and 3,500 US soldiers from the 172nd Striker Brigade combat team are being deployed in the Baghdad area and are expected to start systematically clearing the neighbourhoods of fighters.
The US military separately said that it was still looking for two US servicemen missing since Tuesday when their Black Hawk helicopter crashed in Anbar province, west of Baghdad.