The blast hit Sadr City, the same district where a massive truck bomb ripped through a wholesale vegetable market just two days before, killing at least 54 people.
Read: Market truck bomb kills at least 60 in Baghdad's Sadr City
The Islamic State group claimed responsibility for the latest attack, according to monitoring group SITE, saying that they had targeted a gathering of soldiers, police and Shia Muslims.
The terrorist group said more than 20 people were killed.
IS frequently targets Shias, whom it considers heretics, fuelling sectarian tensions in the country, and often strikes areas such as markets and cafes where crowds gather.
IS overran large parts of Iraq in June 2014 and also holds significant territory in neighbouring Syria.
Iraqi forces have since regained ground from the terrorists, but much of western Iraq remains outside government control.
Even before the IS offensive, bombings targeting civilians in Iraq were a major threat, killing hundreds of people a month.
Read: Iraqi Kurdish forces hit with suspected chemical attack
With terrorists occupied with fighting elsewhere, the frequency of blasts in Baghdad has declined since the IS offensive, but there have still been a number of major bombings in the city in recent months.
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