A bomb killed 10 people including two US government employees and two US soldiers at a council meeting in the Baghdad stronghold of Iraqi Shia cleric Moqtada al-Sadr on Tuesday, officials said.
Police said six Iraqis were killed and 10 wounded in the attack at a local council building in southern Sadr City.
The US military blamed renegade Shia militias called "special groups" for the bombing. That is jargon for rogue elements of Sadr's Mehdi Army militia that the military says are equipped, trained and funded by Iran. Tehran denies the charges.
US forces also blamed a special group cell for a truck bomb that killed 63 people in a Shia neighbourhood of Baghdad a week ago.
A US embassy spokeswoman said one of the dead American civilians worked for the US State Department and the other for the Department of Defense. One US soldier was also wounded, the military said.
The US military said a suspect who had tested positive for explosives residue had been caught trying to flee the scene.
A US military spokesman, said the target of the attack was believed to be a high-ranking council member. It was unclear if that person survived.
A member of Sadr City's council, said the explosion occurred inside the office of the deputy head of the council. Police said the deputy was among the wounded.
Sadr City is the bastion of Sadr's Mehdi Army militia, where battles between gunmen and security forces raged for weeks until a truce took effect in May.
On Monday a gunman killed two US soldiers and wounded three as they left a council building southeast of Baghdad. Iraqi security officials said a local official in the town of Madaen had shot the U.S. soldiers who had gone to visit him.
The US military said the soldiers had just attended a council meeting in the town when they were ambushed.