The blast struck near a tent from which they were distributing tea and water in Al-Ilam area in southwest Baghdad, also wounding more than 20 people, the sources said.
Hundreds of thousands of Shia pilgrims will flock to the Iraqi shrine city of Karbala for Ashura, which marks the death of Imam Hussein, one of the most revered figures in Shia Islam.
Pilgrims have been targeted during Ashura before, but this year's commemorations, which peak on Tuesday, face even greater danger, with the Islamic State (IS) group in control of large areas of the country.
The pilgrimage is a major test for the new government headed by Prime Minister Haidar al-Abadi, as well as for Iraq's security forces, who have struggled to push the militants back.
A major attack during the commemorations in Karbala, where Imam Hussein is buried, would increase already-significant tensions between Iraq's Shia majority and Sunni Arab minority, and could spark revenge attacks.
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