The blast near a Sunni mosque in the northern city of Kirkuk also wounded 22 people, the sources said.
An Agence France Presse photographer at the scene said bodies, their clothes covered in blood, were placed in the back of a small police pickup truck to be taken away. Bright red blood stained the street.
Angry and grieving worshipers railed against those who carried out the attack, shouting, "God take revenge on those who are evil!"
Eid al-Adha, which commemorates the willingness of Abraham (Ibrahim in Arabic) to sacrifice his son at God's command, is the biggest Muslim holiday of the year.
Almost nothing is safe from attack by militants in Iraq, where violence has reached a level not seen since 2008 when the country was just emerging from a brutal sectarian conflict.