More than 60 people are thought to have been injured in the blast
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Stunned eyewitnesses spoke of a "huge ball of fire" that erupted near the crowds outside the main coalition headquarters on Sunday morning.
Mohammed Jabbar said he was waiting to go through security checks when a "very strong" blast occurred.
"It lifted us into the air. People fell on top of one another," Mr Jabbar, who works at the planning ministry, told the Associated Press news agency.
Fires burned, bodies were scattered and the injured walked around in shock.
"After the blast, it was mayhem," said one taxi driver.
"I don't know how but I managed to get out of my car which had become a furnace," Jalal Alwan, 31, told AFP news agency, as blood dripped from his head.
A number of cars in the busy street outside the Republican Palace of the former Iraqi ruler were destroyed when a white pick-up truck blew up about 100 metres (yards) from Assassin's Gate.
"When the car exploded there was a big crowd outside the headquarters," some witnesses told the BBC.
"Soldiers panicked. One was thrown to the ground. I saw an Iraqi coalition employee hit the ground. He was wounded," Ahmed Hassan told French news agency AFP.
Another man, Nabil Abdul Zahaz, said his friend had been standing behind him at the time of the blast.
"I went to check on him. I saw his throat cut. I called for help and no-one came to help me. He died right there on the ground."
Several of the wounded squatted helplessly on the ground, while others shocked and weeping were comforted by bystanders, an AP correspondent said.
Passer-by Wissam Muhammad Shaker told Reuters: "People were thrown aside. Three here, five there. The dead people were workers."