The Islamic State (IS) claimed responsibility for the deadly attack, saying it was targeting Shia militias, CNN reported.
Police said the massive blast occurred when a booby-trapped car exploded at a popular outdoor market in the Shia bastion of Sadr city district.
Many of the victims included women and children. Several of the injured were said to be in critical condition and the death toll was likely to go up.
The explosion damaged nearby buildings and other vehicles.