Iraqi officials said that shells "cooking off" in the fire had crashed down in five districts in the south of the city.
The munitions store in Forward Operating Base Falcon was still burning on Wednesday, more than 13 hours after the strike set off the blaze that lit up the night sky and spread panic in the Iraqi capital.
State television showed live pictures of the fire and ordnance exploding skywards.
US Lieutenant-Colonel Jonathan Withington said: "It was a mortar round. An ammunition holding area caught on fire ... in our operating base in the Rasheed area of the city."
He said the ammunition store contained tank and artillery rounds as well as small arms ammunition.
While there were no reports of US casualties, the explosions marked a rare success for mortar teams working for militia and fighter groups, which rarely cause much damage to well-protected US facilities.
Military and civilian personnel were evacuated from Forward Operating Base Falcon without injury.
The Islamic Army in Iraq, one of a number of armed groups operating in the country, said it carried out the attack.
A statement posted on the group's website read: "The Islamic Army ... [launched] rockets and mortar bombs ... at a base for the occupying American forces."
Iraqi officials called for calm on state television as loud explosions were heard across the city after the blaze started at about 10.40pm [1940 GMT] on Tuesday night.