The bomber rammed his explosives-packed car into a checkpoint near a revered Shiite shrine in the heart of the capital as worshippers awaited security checks before visiting the site during the Islamic holy month of Ramadan.
The Sunni Islamic State group, which seized vast swathes of northern and western Iraq last month, said the attack was "in response to the hostility of the (Shiite-led) government" of Prime Minister Nouri al Maliki and his "criminal militias, who spare no effort in fighting Islam and Muslims".
The Sunni militants' capture of large areas of Iraq last month, including the second largest city Mosul, plunged the country into its worst crisis since US troops withdrew at the end of 2011 and has led to widespread calls for new leadership that can unite the country.
The Islamic militants have vowed to take their campaign all the way to Baghdad, but their initial advance seems to have stalled, with the front lines largely frozen in recent weeks.
Despite the crisis, law makers have struggled to agree on a new president and prime minister since April elections in which Mr al-Maliki's bloc won the most seats.
With president Jalal Talabani's term set to expire, the vote for his successor is part of broader negotiations over forming a new government. At least 95 candidates are in the running.
Mr Talabani, who suffered a stroke in late 2012, returned to the country on Saturday after more than 18 months abroad for treatment.
Since 2003, Iraq's political parties have agreed to assign the position of president to a Kurd, prime minister to a Shiite and speaker of parliament to a Sunni.
Former deputy prime minister Barham Saleh and the Kirkuk provincial governor Najimaldin Karim are tipped to succeed Mr Talabani.