The abduction occurred in the largely Shiite city of Basra when twenty gunmen forced their way into the city's Mina prison and disarmed guards before making off with the detained suspects, police said.
The bodies of three of them were later found in the city centre close to the offices of the state-owned South Oil Company.
The corpses of another seven were found in a south western neighbourhood of Basra.
The attack on the suspected Sunni militants came amid a wave of anger across Shi'ite central and southern Iraq over a bomb attack on one of Shi'ite Islam's holiest shrines.
The bombing of the Imam Ali al-Hadi mausoleum in the town of Samarra north of Baghdad sparked a spate of revenge attacks in the Iraqi capital in which six Sunni civilians were killed and 27 Sunni mosques assaulted.