The mortar rounds hit Quraish Square in the Kadhimiya district, which was filled with Shia pilgrims, AFP reported.
The police said that the death toll may rise.
However, a Health Ministry official said, “Four people were killed and 36, including two Iranian pilgrims, were wounded when two shells fell on Bab al-Delouaza” near the shrines of Shia imams Musa al-Kadhim (PBUH) and Muhammad Jawad (PBUH).
The pilgrims were gathering ahead of a religious ceremony to mark the martyrdom anniversary of the seventh Shia Imam Musa al-Kadhim (PBUH).
Authorities have put security forces on high alert to prevent further attacks on the pilgrims walking towards the Imam's shrine.
An Interior Ministry source said that a vehicle ban, excluding emergency vehicles, would also be imposed in Kadhimiya as of Monday and anyone entering the area would be searched.
Explosions and shootings take place across the country on a daily basis, often targeting Shia-majority areas and local security forces.
Violence has been on the rise since the beginning of the year when the Iraqi government issued an arrest warrant for fugitive Vice President Tariq al-Hashemi.
Hashemi is accused of running a terror hit squad that targeted authorities and Shia pilgrims.