Five mortar rounds struck the Mussayib area south of Baghdad on Thursday, killing 17 people, police and a doctor said.
The shelling, which hit an area of shops and restaurants that draws crowds at night, also wounded 70 people, the sources said.
A car bomb killed one person in Mussayib on Tuesday, one of 10 such blasts to hit central Iraq that day.
Militants frequently attack areas where crowds of people gather, including cafes, markets, football pitches and mosques, in a bid to cause the maximum number of casualties.
Iraqi authorities are struggling to contain the worst violence to hit the country since 2008, when it was just emerging from a brutal period of sectarian killings in which tens of thousands of people died.
But despite measures including wide-ranging operations against militants, the violence has continued unabated.
More than 1,500 people have been killed in attacks and clashes so far this year, after upwards of 6,800 died in violence in 2013, according to AFP figures based on security and medical sources.
And all of one city west of Baghdad and part of another have been held by anti-government fighters for weeks.
It is the first time they have exercised such open control in major cities since the height of the insurgency that followed the 2003 US-led invasion.