It was the second attack on Sunday targeting pilgrims walking towards Karbala to attend Arbain.
The festival commemorates the end of a 40-day mourning period following Ashura, a religious ritual that marks the death of Prophet Muhammad's grandson.
In the first incident, at least three people were killed and up to 36 others wounded in an apparently co-ordinated assault on a group of pilgrims on their way to Karbala.
Iraqi police said a roadside bomb explosion preceded an attack by armed men.
Millions of pilgrims are expected in Karbala for the festival this week.
Many pilgrims prefer to walk to Karbala, which is 110km south of Baghdad, because they believe the effort will bring them greater spiritual reward.
Major-General Raad Shakir, the police chief of Karbala, said that security was tight, compared to previous years.
He also said that Iraqi tanks are being used to protect the city for the first time, in addition to 40,000 police and soldiers.
All public transport, including bicycles, has been banned within a 25km radius of the city, and 600 female security staff have been assigned to search women.
In previous years, fighters have killed scores of pilgrims in suicide bombings and other attacks.