The bomber detonated a pickup truck full of flour parked at a busy marketplace in Tal Afar, close to the Syrian border, as shops were closing at around 8:00 pm on Tuesday (local time), police said.
Prior to the car bombing in Tal Afar, a mostly Turkomen city 420km northwest of Baghdad, 11 people were killed across Iraq on Tuesday, and 12 mutilated bodies were found.
In the past, the city has been the scene of fighting between insurgents and US forces, but several months ago US President George W. Bush held the city up as an example of progress in securing the country.
US and Iraqi forces launched an operation in September aimed at cleansing the city of insurgents - the second such attempt in a year. However, by the end of September, a female suicide bomber slipped into a crowd of recruits, killing at least six people and wounding 30.
Since then, the city has been hit by several suicide attacks, beginning in October when a suicide bomber ploughed his explosives-packed vehicle into a crowded outdoor market, killing 30.
The attack came after prime minister designate Nuri al-Maliki said the line-up for the country's first permanent government of the post-Saddam era was almost ready, after months of tortuous negotiations.
"We will finalise the cabinet today or tomorrow and will present the new government to the parliament this week," he told reporters.
Iraq's political factions have been wrangling since the December election over the shape of a new national unity government, which it is hoped will help quell raging sectarian violence and rein in the Sunni-led insurgency.
"This is a government of all Iraqis and not of one sect," Mr Maliki said. "Iraqis have suffered enough under the Saddam Hussein regime and they now need a strong unity government."
Cabinet '90 percent' ready
Mr Maliki said the cabinet was "90 percent" ready and the candidates for the heads of the five key ministries - interior, defence, oil, finance and foreign affairs - had been finalised.
"The candidates for the interior and defence ministries are independents and not from any major political party, nor do they have any links with any militias," Mr Maliki said.
He did not name them, saying "we will announce the entire cabinet together."
Iraq's interior ministry, led by Shiite Bayan Jabr Solagh, has been accused of operating death squads which have engaged in extra-judicial killings of Sunni Arabs.
Mr Solagh is a member of the Supreme Council of Islamic Revolution in Iraq (SCIRI), a hardline Shiite party with a well-organized militia, the Badr Brigade.
Iraq's numerous Shiite militias have been accused of killing Sunni Arabs in sectarian bloodshed that has left hundreds of people dead since the bombing of a revered Shiite shrine in February.
Mr Maliki, from the Shiite Dawa Party, was selected last month after Sunni Arab and Kurdish groups opposed outgoing premier Ibrahim Jaafari staying in office.
"I will meet some more candidates for other ministries in these two days and I have the confidence to solve the remaining issues and go to the parliament," he said.
Mr Maliki had said he would form a government of national unity by May 10. Under the constitution, he has until May 21 to unveil his line-up.
Mr Maliki said he was opening the doors for armed rebel groups to join the political process.
"If there are people who carried weapons to fight the political process but do not have blood of innocent Iraqis on their hands, I am ready to talk to them and ask them to surrender their weapons and invite them to join the political process."
President Jalal Talabani, a Kurd, has held a series of dialogues over the past few months with seven groups that have been fighting the US-led occupation of Iraq. Armed groups have exploited the political vacuum since the December 15 election.
Iran's ambassador
Meanwhile, Iran's new ambassador to Iraq officially took up his post in Baghdad on Tuesday, the first from Tehran since 1980.
Hassan Kazemi Qomi has served as charge d'affaires to Baghdad for the past two years, although the two countries agreed to raise their representation to ambassadorial level in September 2004.
Mr Qomi stressed the need to stabilize the security situation along the border of the two countries, saying "security for Iraq is security for neighbouring countries, as an unsafe Iraq will be a safe house for terrorists."
Tehran has repeatedly called for the withdrawal of foreign troops, although Mr Talabani repeated to Iranian television his government's view that the time is not right.