According to the witnesses,a refrigerated truck packed with explosives blew up in a crowded market in Sadr City, a Shi'ite district in northeastern Baghdad.
ISIL claims responsibility, according to the sources.
Islamic State took large parts of Iraq in June 2014, and Iraqi forces are battling to drive the jihadists back with support from a US-led coalition and Iran.
Even before the ISIL offensive, bombings targeting civilians in Iraq were a major threat.
The Baghdad blast came two days after bombings in Diyala province, northeast of the capital, killed more than 30 people.