The blast struck the northern oil-rich and ethnically-mixed city of Kirkuk, deputy police chief Maj Gen Torhan Abdul-Rahman Youssef said. Youssef said that the blast in the western al-Wasiti neighbourhood wounded 29.
Kirkuk is located 290 kilometres north of Baghdad.
Militants often target night clubs, liquor stores and brothels. They want to impose a strict interpretation of Islam in Iraq.
The attack comes as Iraq's Shiite-led government is struggling to contain a surge in sectarian violence unseen since the country was pushed to the brink of civil war in 2006 and 2007 after the US-led invasion that toppled dictator Sadaam Hussein. According to the United Nations, 8,868 people were killed in Iraq last year.
Shiite Prime Minister Nouri al-Maliki's bloc emerged as the biggest winner, securing 92 seats in the 328-member parliament, but it failed to gain the majority needed to govern alone.
