The explosion occurred in the densely populated Sadr City district, where citizens were shopping on the eve of the Muslim holiday of Eid Al-Adha.
The latest reported toll of casualties stated 25 people killed and 47 others injured.
Iraqi security services believe that the explosives were detonated by terrorists. No group has claimed responsibility for the attack so far.
Prime Minister Mustafa Al-Kadhimi has ordered the resignation of the district's head of security following the deadly blast.