The U.S. military, meanwhile, announced the arrest of an al Qaeda in Iraq figure who allegedly planned the 2006 kidnapping of American journalist Jill Carroll - one of the highest-profile attacks against Westerners in Iraq.
The suicide attack occurred inside one of several tents set up outside a house in the Abu Ghraib area on Baghdad's western outskirts, according to residents and police. It was unclear if the former detainee was among the casualties.
A woman who was wounded but declined to give her name for security reasons said she was preparing food behind the tents when the blast occurred at about 9 p.m., knocking her and her three young children off their feet.
Residents and police said Ayyid Salim al-Zubaie, a local sheik in the mainly Sunni area, had invited dozens of guests to a banquet in honor of his son, who was released earlier in the day from Camp Bucca in southern Iraq.
Residents said the detainee-son had quarreled with al Qaeda members while in detention and may have been the target of the attack.
The guests also included several members of the local awakening council, a U.S.-allied group that has turned against al Qaeda.
Yassir al-Jumaili, a doctor at the hospital in nearby Fallujah where most of the wounded were taken, gave the death toll as 25 and said at least 29 other people were wounded.
The blast was a grim reminder of the dangers still facing Iraqis despite a sharp decrease in violence after the 2007 U.S. troop buildup, a Sunni decision to join forces with the Americans against al Qaeda and a Shiite militia cease-fire.
The announcement of the arrest of Salim Abdullah Ashur al-Shujayri, also known as Abu Othman, was a major breakthrough in a series of kidnappings.
He was captured Aug. 11 in Baghdad and accused of being "the planner behind the kidnapping" of Carroll, a Christian Science Monitor reporter who was seized Jan. 7, 2006 and released three months later, according to the military.
The statement also said al-Shujayri's associates were involved in the kidnappings of Christian peace activists and British aid worker Margaret Hassan, but did not elaborate.
Kidnappings of Westerners forced foreigners to flee Iraq or take refuge in heavily guarded compounds, diminishing the ability of aid groups and journalists to operate. Many of the victims were butchered and their deaths recorded on videotapes distributed to Arab satellite TV stations or posted on the Web.
Hassan, 59, the director of CARE international in Iraq, was abducted in Baghdad in October 2004 and shown on a video pleading for her life, calling on British Prime Minister Tony Blair to withdraw troops from Iraq.
She was killed a month later, but her body was never found. The case drew special attention because Hassan, who was married to an Iraqi, had lived in the country for 30 years and spent nearly half her life helping Iraqis.
Four men from the Chicago-based group, Christian Peacemaker Teams, disappeared Nov. 26, 2005, in Baghdad and videotapes later showed them in captivity. One of the hostages, American Tom Fox, 54, of Clear Brook, Va., was found shot dead. The other three - two Canadians and a Briton - were later rescued.
Carroll was seized in west Baghdad and her interpreter was killed. The kidnappers, a formerly unknown group calling itself the Revenge Brigade, demanded the release of all women detainees in Iraq. U.S. officials freed some female detainees but said the decision was unrelated to the demands.
The statement said U.S. troops also captured another al Qaeda figure - Ali Rash Nasir Jiyad al-Shammari - on Aug. 17 in Baghdad. He was accused of being a senior adviser for the terror network and funneling money, weapons and explosives to insurgents in the capital "during its most active operational period in early 2007," the military said.
Al-Shammari, also known as Abu Tiba, personally approved targets for car and suicide bombings targeting Iraqi civilians, the military said.
The military statement said al Qaeda in Iraq conducted almost 300 bombings, killing more than 1,500 civilians and wounding more than twice that many in 2007, compared with 28 attacks that killed 125 Iraqi civilians in the first half of this year.
"The capture of Abu Tiba and Abu Othman eliminates two of the few remaining experienced leaders in the AQI network," said military spokesman Rear Adm. Patrick Driscoll.
Also Sunday, the U.S. military said a 13-year-old girl wearing a bomb-laden vest surrendered to Iraqi police in Baqouba rather than blow herself up. She led police to a second suicide vest and was detained, the military said.
Women have increasingly been recruited by insurgents to carry out attacks because it's easier for them to evade security checks.