The attack on January 27 took place in the predominantly Shi'ite neighborhood of Zafaraniyah, where mourners had gathered for a funeral.
Several nearby shops, houses, and vehicles were burned or destroyed in the blast.
The Associated Press news agency quotes police as saying that minutes after the blast, gunmen opened fire at a checkpoint in Zafaraniyah, killing two police officers.
Reports say the funeral was for a real estate agent, Muhammad al-Maliki, who along with his wife and son was killed by gunmen on January 26 in Baghdad.
This latest attack comes amid a political crisis in Iraq pitting the Shi'ite-led government against the main Sunni-backed bloc.
compiled from agency reports