The explosion occurred in the Kurdish village of Wardak, near Mosul, just after midnight local time on Thursday (about 22:00 BST last night).
A number of homes are said to have been destroyed, with officials warning the death toll could still rise with people feared trapped under the rubble.
Local reports suggest a second attack in the village was also averted when Kurdish police killed a driver before he was able to detonate his explosives.
Violence in Iraq has spiked in recent weeks. On Tuesday four US soldiers and ten Iraqi police officer officers were killed in the north of the country.
Militants are said to be attempting to exploit the continuing power struggle between Kurds and Arabs in the area surrounding Mosul.
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