A bomb attached to a minibus killed seven people and wounded 24 others at a bus terminal in southern Baghdad on Monday, police said.
Violence has fallen sharply in Iraq over the past year, and the number of civilians killed in May was the lowest monthly toll since the U.S.-led invasion in 2003. But Iraqi and U.S. forces have yet to stamp out a stubborn insurgency.
Monday's blast took place in the mainly Shi'ite Muslim neighbourhood of Abu Dsheer. Shi'ite areas are often targeted by Sunni Islamist groups who consider Shi'ites heretics.
Such bombings cast doubt on the Iraqi security forces' ability to stand alone as U.S. combat troops prepare to withdraw from Iraqi cities by the end of this month.
Analysts say violence may increase ahead of national elections due in January 2010, which could pit Shi'ite groups against each other.
All U.S. personnel are due to leave Iraq by the end of 2011 under a security pact between Washington and Baghdad that came into effect at the start of this year.