The target and casualties were not immediately clear.
AFP quoted an unnamed Interior Ministry official as saying at least two people were killed and five wounded.
An unnamed spokeswoman at the Iranian Embassy told Reuters that the mission was not damaged. The area has seen numerous attacks in the past.
Officials have warned of a possible upsurge in attacks by Sunni Arab insurgents following the 20 January publication of results of the 15 December parliamentary elections, which showed continued dominance by Shi'ite Islamists.
(Reuters, AP, AFP)