The bomber struck a gathering of members of the Sahwa militia in Anbar provincial capital Ramadi at around 8:30 pm, a police officer and a doctor at the city's hospital said.
Three Sahwa militiamen were killed and five others wounded in the blast in the east of the city.
The Sahwa, who joined US forces in the battle against Sunni co-religionists of Al-Qaeda from late 2006 turning the tide against the jihadists at the time, have been fighting alongside government forces this month against the resurgent militant network.
It is the first time militants have exercised such open control in major cities since the height of the insurgency that followed the US-led invasion of 2003.
In Fallujah, four neighbourhoods came under heavy shelling late Thursday, witnesses and officials said, adding that there had been casualties, without being able to provide numbers.
Residents of Fallujah have accused the Iraqi army of carrying out the artillery bombardment from its positions on the city's eastern edge but defence officials have insisted they are not responsible.
But with a parliamentary election looming in April, Prime Minister Nuri al-Maliki has ruled out dialogue with the militants.
Fighting erupted in the Ramadi area on December 30, when security forces cleared a year-old Sunni Arab protest camp.
It spread to Fallujah, and militants moved in and seized the city and parts of Ramadi after security forces withdrew.
ISIL has been involved in the fighting along with anti-government tribesmen. The government has recruited its own allies among the province's powerful tribes.