The hardline Sunni Islamist group which has led an offensive through northern and western Iraq said the explosion in Kadhimiya, site of a major Sh'ite shrine, was carried out by a fighter it named as Abu Abdul-Rahman al-Tunisi (the Tunisian).
Officials initially put the death toll from the bomb at 23, but hospital and morgue officials said on Wednesday morning it had risen to 33, with more than 50 wounded.
The Islamic State has claimed responsibility for a wave of bombings in Baghdad, including several blasts on Saturday which killed 27 people.
Sunni fighters led by the Islamic State swept through most of Iraq's Sunni Muslim provinces towards Baghdad last month, their advance halted less than 100 km from the capital.
Government forces launched a counter-offensive a week ago to recapture Tikrit, home city of executed former president Saddam Hussein, but withdrew within hours after coming under fierce onslaught from the militants.
On Wednesday morning an air strike by government forces on a civilian neighborhood in the town of Sharqat, north of Tikrit, killed 12 people, a hospital source said.
Security forces also found the bodies of eight Iraqi soldiers 3 km (2 miles) outside Samarra, the most northern city under full government control.
(Reporting by Raheem Salman; Writing by Dominic Evans; Editing by Michael Georgy and Andrew Heavens)
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