The attack occurred late on Monday night when a booby-trapped car detonated near a hospital at a busy thoroughfare in Karrada neighbourhood in southern central Baghdad, the source said on condition of anonymity.
The blast destroyed several nearby shops and many stalls, along with several civilian cars, the source said.
Iraqi security forces sealed off the area and blocked the roads leading to the scene, while ambulances and police vehicles evacuated the killed and wounded people to the city hospitals, the source added.
In early July, Karrada was the scene of massive bombing that killed and wounded hundreds of people and huge fires in several nearby commercial buildings.
Terrorist acts, violence and armed conflicts killed 691 Iraqis and wounded 1,016 others in August across Iraq, the United Nations Assistance Mission for Iraq said on Thursday.
