According to police the blast went off as worshippers gathered for Friday's noon prayers at the Buratha mosque in northern Baghdad.
The attack is on the mosque which was the scene of a blast on April 7, when three suicide bombers dressed as women detonated explosives, killing at least 71 people.
Authorities have said that Al-Qaeda in Iraq has attacked Shi'ite mosques in a bid to incite a civil war between Shi'ites and Sunni Arabs.
For the third day, the Iraqi capital remained under a security lockdown, as more than 50,000 Iraqi and US forces patrolled the streets.
It’s the government's latest effort to curb bloody unrest in Baghdad, which has claimed the lives of dozens of people each day in bombings and shootings.
US death toll mounts
The attack comes as the mounting US military death toll in Iraq climbed to 2,500.
A combat death of a marine raised the toll in what the White House has called “a sad benchmark.”
However, President George W Bush said that he believed the US soldiers did not die in vain.
In the US Congress a minute of silence was observed in memory of the 2,500 military personnel who have died in Iraq.
Despite the growing toll a resolution in the US Senate calling for the withdrawal of US troops from Iraq by the end of the year was defeated by a vote of 93-6.
In the House of Representatives, debate opened on a Republican resolution that endorses the president's strategy for fighting the war.
The resolution also opposes setting a date for the withdrawal or redeployment of US forces.
The Senate has also approved a US$94.5 billion emergency military spending package that includes US$65.8 billion for operations in Iraq and Afghanistan.
The package also has US$4 billion for US allies in the "war on terror", US$2.7 billion for Iraq and US$66 million to "promote democracy" in Iran.
The war on terror has not cost the the United States US$438 billion since the September 11, 2001 attacks.
President Bush was hoping for a boost following the killing of Al-Qaeda leader Abu Musab al-Zarqawi a week ago and his surprise trip to Baghdad.
But polls show little change in public sentiment about the war with a Wall Street Journal/NBC News poll showing the President’s approval rating increasing only one point from 37 percent in April, an all-time low for his presidency.
Fifty-eight percent disapproved of Bush's work as president, up one point from April while fifty-three percent said they were less confident of a successful conclusion to the war in Iraq with 38 percent more confident, up five points from two months ago.
Another 53 percent believed the US invasion of Iraq in March 2003 was a mistake, compared to 43 percent who thought the contrary.