The bomber detonated a vest laden with explosives at about 2:45 p.m. in the Ibn Zanbour restaurant, just 400 yards from the main gate of the heavily fortified Green Zone.
The restaurant is especially popular with Iraqi police and soldiers, and there were seven police officers among the dead. The injured included 16 police officers and the bodyguards of Iraqi Finance minister Ali Abdel-Amir Allawi, police Lt. Col. Talal Jumaa said. The minister was not in the restaurant.
Al Qaeda in Iraq, Abu Musab al-Zarqawi's terror group, claimed responsibility for the attack, and in a statement said the bomber blew himself up in a restaurant that was next door to the one where the victims died. The targets, according to the group, were police officers and what it called "spies and collaborators" who gathered there.
The statement also said the bomber was from the area of Iraq near the Syrian border targeted by a U.S. offensive over the past few days.
In other developments:
Meanwhile, nearly 60 insurgents have been killed and 100 captured so far in the Spear and Dagger offensives, which are aimed at destroying militant networks near the Syrian border and north of Baghdad, the military said. Three Americans have been wounded.
The Marine who was killed Saturday by small-arms fire during Operation Spear had been assigned to Regimental Combat Team 2 of the 2nd Marine Division. At least 1,720 members of the U.S. military have died since the beginning of the Iraq war in March 2003, according to an Associated Press count.
Troops participating in Operation Spear, in its third day in the Anbar province town of Karabilah, fired Hellfire missiles overnight at two homes where insurgents holed up after shooting mortars at coalition forces, said Lt. Col. Tim Mundy, commander of the 3rd Battalion, 2nd Marine Regiment. The military said they believed four or five militants may have been killed in the counterattack.
A battle tank killed a suspected suicide truck bomber, Marine Capt. Jeffrey Pool said from Ramadi, the provincial capital. The vehicle exploded, and the tank crew observed secondary blasts from explosives rigged to it.
Intelligence officials believe Anbar province is a portal used by extremist groups, including Abu Musab al-Zarqawi's al Qaeda in Iraq terrorist group, to smuggle in foreign fighters. Syria is under intense pressure from Washington and Baghdad to tighten control of its porous 380-mile border with Iraq.
The majority of the region's residents are Sunni Arabs, who are believed to make up the core of an insurgency that has killed at least 1,131 people since Prime Minister Ibrahim al-Jaafari's Shiite-led government was announced April 28.
The second offensive, Operation Dagger, was launched Saturday, targeting the marshy shores of a lake north of Baghdad. Dagger seeks to eliminate insurgent training camps and weapons caches in the Lake Tharthar area, 50 miles northwest of Baghdad.
Both operations come on the heels of two other major offensives in the same areas that killed about 125 militants earlier this month and in March. Iraqi troops did not participate in earlier offensives in the area.