Torn limbs, feet and other body parts littered the street outside the medical clinic in Hillah, about 60 miles south of Baghdad.
Babil province police headquarters said in an announcement that "several people" were arrested in connection with the blast. It did not elaborate.
The blast came a day after Iraq announced the capture of a key insurgent leader in neighboring Syria. It was the deadliest single attack since the insurgency began nearly two years ago.
In other developments:
Maj. Gen. Osman Ali, an Iraqi National Guard commander in Hillah, put the toll from Monday's bombing at 115 dead and 132 wounded. A health official in Babil province said the death toll could rise.
"The martyrs may be more because there a number of body parts" to be counted, Mahmoud Abdul Reda said at the hospital. Morgue workers unloaded plastic body bags from pick up trucks as weeping relatives looked on.
A spokesman for Polish troops deployed in the area, Lt. Col. Zbigniew Staszkow, said Iraqi police told him 110 people had died but that the figure could rise.
The attack in Hillah, with a majority Shiite population, came as the clergy-backed United Iraqi Alliance sought the support of other parties to form Iraq's first-ever democratically elected government.
Insurgents have stepped up their attacks against predominantly Shiite targets in recent weeks. A series of suicide bombings and other attacks left nearly 100 people day over the two-day Ashoura commemoration that began on Feb. 18.
Hillah is located just below the so-called "triangle of death," the mixed Sunni-Shiite region south of the capital that has earned the nickname owing to the frequency of insurgent bombing.
The 9:30 a.m. blast outside the medical clinic was so powerful it nearly vaporized the suicide bomber's car, leaving only its engine partially intact. The injured were piled into pickup trucks and ambulances and taken to nearby hospitals.
Outside the concrete and brick building, people gingerly walked around small lakes of blood that pooled on the street. Scorch marks infused with blood covered the clinic's walls and dozens of people helped pile body parts, including arms, feet and limbs, into blankets. Piles of shoes and tattered clothes were thrown into a corner.
Angry crowds gathered outside the hospital chanting "Allah Akbar," Arabic for "God is great," and demanded to know the fate of their relatives.
The director of Hillah General Hospital, Dia Mohammed, said most the victims were recruits waiting to take physicals as part of the application process to join the Iraqi police and national guard.
Several people believed to be Sudanese were seen being arrested by police. Some of Baghdad's past suicide bombers have in the past been identified as Sudanese.
The suicide bombing came one day after Iraqi officials announced that Syria had captured and handed over Saddam Hussein's half brother, a most-wanted leader in the Sunni-based insurgency, in the latest in a series of arrests of important insurgent figures that the Iraqi government hopes will deal a crushing blow to violent opposition forces.
The arrest of Sabawi Ibrahim al-Hassan also ended months of Syrian denials that it was harboring fugitives from the ousted Saddam regime. Iraq authorities said Damascus acted in a gesture of goodwill.