The bomb exploded outside a family home hosting a wedding reception in the north Baghdad district of Ur, just as the bridegroom's party was arriving in a convoy of cars late on Tuesday.
Qasim Modalal, director of the Imam Ali hospital, told AFP that 23 people were killed in the blast - including 19 infants - and that another 19 were wounded, many of them seriously.
Other news agencies said that only four children had been killed in the bombing.
Baghdad is in the grip of a vicious sectarian war between rival Sunni and Shia extremist factions, despite a massive security operation that has 15,000 US troops and more than 40,000 Iraqi soldiers and police on the streets.
A separate car bomb killed three people and wounded five others in the mainly Shia area of Sadr City, a day after an earlier bomb attack killed at least 33 people there.
The bomb exploded at 8.30am (0530 GMT) on Tuesday, killing two men and a woman as they were travelling in a car near a local restaurant, police spokesman Ahmad Muhammad Ali said.
Small-arms fire and IEDs remain
the biggest enemy for US troops
The US military also announced that two of its soldiers were killed on Monday.
Of the two Baghdad-based US soldiers announced dead on Tuesday, one was killed at 5pm on Monday (1400 GMT) after being hit by small-arms fire in a western district of the capital.
The second died 30 minutes later when the vehicle he was travelling in was struck by a roadside bomb just south of the Iraqi capital, the military said in a brief statement.
Iraqi security forces also suffered losses. One policeman was killed and three injured on Tuesday morning when a roadside bomb struck their patrol in the capital's southeastern New Baghdad neighbourhood, police spokesman Muhammad Khayun said.
A second officer, police commando unit commander Ali Abdul-Kadhim, was killed by unknown assailants in a car while standing near his home in eastern Baghdad, police captain Muhammad Abd al-Ghani said.
The bodies of five unidentified people, including a woman, were found dumped early on Tuesday morning in eastern Baghdad, police major Mahir Hamid Mussa said.
Those killed had been tied up and blindfolded, with their bodies showing signs of torture - a typical sign that they had been abducted by death squads, Mussa said.
The police also reported that 40 Shias had been kidnapped while travelling in a bus north of Baghdad on Tuesday.