The explosion took place during a funeral in the courtyard of a mosque that was still under construction. The mosque is located in a poor Mosul neighborhood and is surrounded by many homes.
"As we were inside the mosque, we saw a ball of fire and heard a huge explosion," said Tahir Abdullah Sultan, according to the Associated Press. "After that, blood and pieces of flesh were scattered around the place."
U.S. troops cordoned off the site of the explosion in the northeastern Tameem neighborhood, while civilian vehicles helped emergency crews take casualties to the hospital.
Insurgents in the past have targeted Shiite mosques and funerals. Mosul in particular has been a hotbed of insurgent activity against Iraqi security forces, the Shiite majority and people thought to be working with U.S.-led forces.
As Iraq moves toward shaping a new democratic government, Shiites and Kurds announced an agreement Thursday that sets the stage for the National Assembly meeting next week.
The deal calls for the government to begin discussions on the return of about 100,000 Kurds to the oil-rich northern city of Kirkuk and on redrawing existing Kurdish regions to include the city in Iraq's new constitution, reported the AP.