Five Iraqi students were also wounded in the explosion. US forces immediately stormed the building though no reports of arrests were forthcoming.
At least five US soldiers have been killed by resistance fighters in the past 24 hours, bringing the death-toll to 10 since US troops killed Saddam’s sons Uday and Qusay on Tuesday.
Forty-nine US soldiers have been killed in ambushes since 1 May, when US President George Bush declared an end to major military operations in Iraq.
Around another 60 have died in what the US calls non-combat roles.
In a separate incident, US troops shot dead an Iraqi and wounded three others when they fired on demonstrators in Karbala on Sunday.
Occupation troops discharged their rifles in the air in the holy, predominantly Shia city in a bid to disperse hundreds of demonstrators, angry over the killing of a local man.
US Marines claimed shots were also fired from the crowd.
One of the injured demonstrators said he had been struck with an electric cattle prod.
The latest violence coincides with a report that four US soldiers have been charged with abusing Iraqi POWs.
They now await a decision on whether they will be court-martialled, a US defence official said on Saturday.
This is the first time US troops have been formally accused of mistreating captured Iraqi since the start of the US-led invasion in April.