The explosion in the Iraqi capital's bustling Karrada neighborhood also wounded 27 people, police and health officials said, speaking on condition of anonymity in line with regulations.
A closed-circuit camera captured the moment of the explosion, the video showing a busy downtown avenue, with cars driving down the street when a massive blast strikes. A huge fireball then engulfs a building, forcing the cars to scramble to get away.
The attack came just days into the holy month of Ramadan when Muslims fast during daylight hours. After sundown, families break their fast and Baghdad's restaurants and cafes quickly fill up with people staying up long into the night.
During Ramadan last year, another section of Karrada was hit by massive suicide bombing that killed almost 300 people, the deadliest single attack in the Iraqi capital in 13 years of war. The attack was also claimed by IS.
Iraqi commanders say the offensive, which recently entered its eight month, will mark the end of the IS caliphate in Iraq, but concede the group will likely increase insurgent attacks in the wake of military defeats.
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