The blast erupted late in the afternoon in the town which is about 60 kilometers (40 miles) south of the Iraqi capital. It targeted worshippers returning from the Shiite holy city of Karbala following the climax of the religious commemoration known as Arbaeen.
Children were among the 20 people confirmed killed, according to a police official. He said at least 50 people were wounded.
The bomb went off in the middle of a gathering of pilgrims changing buses. They were coming from Karbala on their way to other destinations in the country, according to police.
“The explosion shook the whole block and smashed the windows of my house,” Ibrahim Mohammed, a teacher who lives nearby, told the Associated Press. “I ran to the scene of the explosion only to find charred bodies and burning cars. There were women screaming and searching for their missing children.”
A hospital official confirmed the casualty toll. The officials spoke on condition of anonymity because they were not authorized to release information to reporters.
“I was getting a sandwich when a very strong explosion rocked the place and the blast threw me away. When I regained my senses and stood up, I saw dozens of bodies,” Ali Sabbar, a pilgrim who witnessed the explosion, told Reuters.
“Many cars were set on fire. I just left the place and didn't even participate in the evacuation of the victims,” Sabbar added.
Arbaeen has been a frequent target for militants since the U.S.-led invasion that toppled Sunni dictator Saddam Hussein, who banned Shiite festivals.
The latest violence followed nearly two week of protests against Shiite Prime Minister Nuri al-Maliki by thousands of people from the minority Sunni community in the western province of Anbar.
Although violence is far lower than during the sectarian strife of 2006-2007, a total of 4,471 civilians died last year in what one rights group described as a “low-level war” with insurgents.