Five members of an Iraqi family were killed when US forces opened fire on their vehicle outside a military base near the city of Baquba, police say.
US convoys usually display signs to warn drivers away
A US military spokesman said the minibus they were travelling in failed to stop as it approached a roadblock at about 0800 (0500 GMT).
Two men and three children were killed and two women and a child were wounded, Iraqi police said.
A US military spokesman put the toll at three dead and two wounded.
The family was travelling to a funeral at the time, witnesses said.
The roadblock had been set up to allow military vehicles to turn off a highway into the base.
"The Iraqi car wouldn't slow down and warning shots were fired," Maj Steven Warren told news agency AFP.
He said the vehicle did not stop and came under machine-gun fire.
Killed one by one
Ahmed Kamel al-Sawamara, a 22-year-old who was driving the car, said he had no time to react when shots began raining down.
"The soldiers started shooting at us from all over," he told reporters. "I slowed down and pulled off the road, but they continued firing.
"I saw my family killed, one after the other, and then the car caught fire. I dragged their bodies out."
Since the US-led invasion in 2003, there have been repeated incidents in which American troops have fired on civilian vehicles.
Checkpoints and convoys are frequently targeted by insurgents and troops often put up signs in Arabic telling people to stay back or risk being shot.
The US military said it takes all possible measures to avoiding shooting innocent civilians.
Correspondents say Iraqis generally pull over to the side of the road when coalition forces approach.