The badly decomposed remains of about 30 people have been discovered by Iraqi police on the outskirts of a mainly Sunni district in southern Baghdad.
Iraqis who have lost relatives gathered to try to identify remains
Police estimated that the victims were killed at least six months ago.
US troops have recently taken control of Doura district, which was previously dominated by a Sunni militant group linked to al-Qaeda.
It is the third such mass grave to be uncovered this month in the capital, according to US and Iraqi forces.
Dozens of bodies have been found in areas west and north of Baghdad where US forces are conducting campaigns to destroy al-Qaeda and related groups.
Meanwhile, the US military says its forces have killed at least six gunmen in raids in the centre and north of Iraq.
Iraqi police said the remains were found at a number of unfinished buildings in wooded land on the outskirts of Doura.
They said the bodies were so badly decomposed that it was hard to judge how many victims were involved but it was estimated there were about 30.
The remains were taken to a nearby Shia mosque where people who had lost relatives gathered to try to identify the bodies.
In Baghdad and to the north and west there has been a gathering trend whereby Sunni tribes and nationalist groups have turned against al-Qaeda as their primary enemy, says the BBC's Jim Muir in the capital.
The Americans have co-opted many of the young men to join up as auxiliaries and it was a group of them who discovered the bodies, our correspondent says.
The number of violent civilian and military deaths in Iraq has continued to drop, according to recent statistics from a number of sources.
There is no single reliable source but a number of groups agreed on a marked improvement, generally attributed to the US and Iraqi troop surge in and around Baghdad that began in February.