Ali Jaasim, an assistant doctor at Sadr City’s Imam Ali Hospital, also said the number of injured had risen to 78.
In a statement, the army’s Baghdad Operations Command said the attack had targeted a crowded marketplace.
Daesh, speaking via a group-affiliated website, said the attack had been carried out by one of its suicide bombers, who it identified as Abu Sulaiyman al-Ansari.
In recent years, bombings and shooting attacks, which often target civilians, have become a common occurrence in war-torn Iraq, especially capital Baghdad.
Iraq has suffered a devastating security vacuum since 2014, when Daesh overran Mosul -- the country’s second largest city -- before going on to capture additional territory in Iraq and Syria.