Around a dozen mortar rounds have exploded in Kerbala, a city in southern Iraq, as thousands of Shia gathered there for their annual religious festival of Ashura.
Early reports said that the rounds landed harmlessly near the governor's office on Saturday evening.
Earlier a police officer said it was feared there were casualties but said that many details of the attack were unclear.
The site had been sealed off, witnesses said, and pilgrims told to keep away from the area.
Ashura lasts for 10 days and is the highpoint of the Shia Muslim religious year.
The religious ceremonies of Iraq's Shia Muslims - who make up 60 per cent of the country's population - have frequently been attacked during the war in Iraq.
Many of the attacks are believed to have been carried out by Sunni Muslims - some of whom regard the Shia as heretics.