The bombing occurred during the morning rush hour, setting cars on fire, sending metal flying and shaking buildings two miles away, according to The Washington Post.
Some of the victims worked in the coalition headquarters and most were Iraqis, according to wire reports. Three U.S. soldiers and three U.S. workers were among the injured.
The attack was the deadliest since the capture of Saddam Hussein on Dec. 13 and the first vehicle bombing inside the U.S.-controlled "Green Zone" along the west bank of the Tigris River.
Brig. Gen. Mark Hertling, deputy commander of the 1st Armored Division, said a suicide bomber caused the explosion. "It certainly was a vehicle-borne bomb, suicide bomb," he told CNN International. "There was evidently someone in the car."
The truck bomb exploded 50 to 100 feet from a security checkpoint at the gate to the compound.
"My friend was standing behind in the line when the explosion happened," said Nabil Abdul Zahar, the Associated Press reported. "There were lots of injured. I called for help, and no one came to help me. He died right there on the ground."
Iraqi police announced on loudspeakers that coalition forces would pay $2,500 to anyone providing information on the perpetrators.
The bombing came a day before talks among U.S. administrator in Iraq Paul Bremer, U.N. Secretary-General Kofi Annan and U.S.-appointed Iraqi officials at U.N. headquarters in New York about the planned transfer of power in Iraq on July 1.
Washington, which proceeded with the invasion of Iraq last year without garnering support from all U.N. allies, is seeking U.N. participation in Iraq's government transition in the hopes that it will help win over Iraqis, particularly Shiites who have been protesting for early elections.
The United Nations withdrew its workers from Iraq after a suicide attack Aug. 19 at the U.N. compound in Baghdad killed 22, including the top U.N. envoy in Iraq, Sergio Vieira de Mello.
Annan has set three conditions for the United Nations to return to Iraq: complete clarity on the scope of the U.N. role, security guarantees, and assurances that the substance of the U.N. role would justify the risks, the Post reported.
Meanwhile, the U.S. Army said Monday that an American soldier died over the weekend from wounds sustained in a bomb attack Friday in the town of Samarra, about 60 miles north of Baghdad.
Also Monday, Japan began sending soldiers to Iraq to prepare for the eventual deployment of 1,000 troops.
The dispatch marks a historic shift away from Japan's purely defensive security policy since World War II and poses a political risk for Prime Minister Junichiro Koizumi if casualties occur, according to Reuters.
The troops will be based in the mainly Shiite southern city of Samawa, where they will conduct reconstruction and humanitarian operations.