Officials said 50 others were wounded in the bombing in the northern Iraqi city, CNN reported.
The bombing happened on the day the Iraqi government declared a national holiday to mark the transfer of security duties from U.S. troops to Iraqi forces.
On the eve of National Sovereignty Day, four U.S. troops stationed in Baghdad died of combat-related injuries, the U.S. military said. Details about the incident weren't released.
Even though the official celebration was Tuesday, the U.S. military Monday turned over to the Iraqis control of the one-time defense ministry complex that was the joint base for U.S. and Iraqi forces, USA Today reported.
Speaking at a military parade inside the Green Zone, Iraqi Prime Minister Nouri al-Maliki said, "The national united government succeeded in putting down the sectarian war that was threatening the unity and the sovereignty of Iraq."
Thousands of Iraqis gathered in Baghdad's Zawra Park for a concert to mark the transfer, part of a security agreement that requires all U.S. combat troops to leave Iraq by Aug. 31, 2010.
In Basra, "No No Americans" was spray-painted on walls, The Washington Post reported. Another graffiti artist wrote: "Pull your troops from our Basra. We are its sons and want its sovereignty."
U.S. forces were being deployed to borders and areas around Baghdad and Mosul, where U.S. commanders said they hope troops can interdict militants and weapons.
"We are grateful for what the U.S. military did in toppling Saddam Hussein's regime and fighting the militias and al-Qaida," Iraqi government spokesman Tahseen al-Sheikhly said. "What we need now is their help rebuilding our country."