An official told the BBC that a bomber wearing a suicide vest had detonated his device in a crowd. At least 60 people were injured in the attack.
The blast happened on a main route to the Shia city of Karbala, which is hosting a religious festival.
The bomb comes despite a recent lull in violence following a US troop increase.Police told the BBC the bomber walked into a comfort station for pilgrims and then detonated a device.
It was the second attack on Sunday on pilgrims commemorating Imam Hussein, grandson of the Prophet Muhammad.
The first occurred in Baghdad, in the southern district of Doura.Three were killed and 49 wounded when militants attacked passing pilgrims.A roadside bomb was detonated with gunmen then opening fire.
The BBC's Jim Muir in Baghdad says that, because of attacks on pilgrims in previous years, security was extremely tight, with vehicles banned from many main routes, observation points set up and armed foot patrols moving among the hundreds of thousands of people joining the pilgrimage.
However, our correspondent says that protecting so many people, many of them travelling on foot, from bombers willing to mingle with the crowd and carry out suicide attacks is an extremely difficult task.
Iskandariya, in Babil province, was a flashpoint for years, but correspondents say violence had recently declined there.
The US said this was due to a Sunni alliance siding with the US against al-Qaeda in Iraq, as well as the influx of US troops.
However, our correspondent says that this latest attack shows that despite a relative improvement in the overall security situation since last summer, the campaign to revive the cycle of sectarian violence in the country is very much alive.
The religious festival of Arbaeen marks the end of 40 days of mourning for Prophet Muhammad's grandson, Imam Hussein, who was killed along with his family in 681, by the Muslim ruler of Arabia, Yazid.
Millions of Shia pilgrims are expected in Karbala for the festival this week - many prefer to walk believing the effort will bring them greater spiritual reward.