The explosion was apparently targeting a police station but it also heavily damaged a nearby medical clinic in a crowded area in Dujail, according to police.
Concrete barriers largely protected the police station, while the medical clinic was more heavily damaged, the officials said.
Two police officers and a hospital official gave the casualty toll on condition of anonymity because they weren't authorized to release the information.
Dujail, 50 miles north of Baghdad, was the site of a 1982 assassination attempt against former leader Saddam Hussein. The ousted Iraqi leader was hanged on Dec. 30, 2006, after being convicted of ordering the killings of more than 140 Shiites from the town in retaliation.
The blast was the latest in a series of attacks in areas north of Baghdad, where violence has been slower to decline than elsewhere in the country.
Earlier Friday, a suicide bomber blew himself up in front of a Shiite mosque farther north in Sinjar as worshippers left prayers at midday, killing two civilians and wounding 15, police chief Col. Awad Kahlil said.
Sinjar is near Mosul, which is the target of an ongoing U.S.-Iraqi operation against Sunni insurgents.
In political developments, Shiite followers of anti-U.S. cleric Muqtada al-Sadr demonstrated in Baghdad and the southern city of Kufa against plans for a U.S.-Iraqi security agreement that will determine the status of the U.S. military in Iraq after the current U.N. mandate expires at the end of the year.
In Baghdad's Sadr City neighborhood, Sheik Abdul Hadi al-Mohammadawi, an al-Sadr aide, told worshippers during prayers that it is a "suspicious agreement" that would bring "humiliation and degradation to the Iraqi people."
After the prayers, worshippers burned American and Israeli flags and chanted: "No, America, no! No, agreement, no!"
In Kufa, al-Sadr supporters carried banners, including one that said: "We won't accept Iraq being an American colony!" Another said: "The suspicious agreement means the permanent occupation of Iraq."
U.S. and Iraqi forces routed Shiite militiamen loyal to al-Sadr in a spring offensive in Sadr City.
U.S.-Iraqi talks on the security agreement slowed over Washington's insistence on retaining sole legal jurisdiction over American troops in Iraq and differences over a schedule for the departure of the U.S. military.
Iraqi officials want all foreign troops out by the end of 2011. However, U.S. President George W. Bush has resisted a firm timetable for withdrawing troops from Iraq.
In other Iraq news: