The attack on Shiite devotees on the outskirts of the port city of Basra came with Iraq mired in a political row that has pitted the Shiite-led government against the main Sunni-backed bloc and stoked sectarian tensions less than a month after US forces completed their withdrawal.
The violence was the latest in a spate of attacks against Shiite pilgrims in the two weeks leading to the conclusion of Arbaeen, which marks 40 days after the Ashura anniversary commemorating the slaying of Imam Hussein, one of Shiite Islam`s most revered figures, by the armies of the caliph Yazid in 680 AD.
A police major in Basra put the toll from the 9:00 am (0600 GMT) bombing at 20 killed and 15 wounded, while a medic at Basra`s Sadr Hospital said there were 25 dead and 40 wounded.
Both spoke on condition of anonymity.
The attacker, who had been distributing cake to pilgrims walking to the Khutwa Imam Ali, a site on the outskirts of Basra venerated by believers for its associations with one of the key figures of their faith, blew himself up near a police checkpoint.
Pilgrims in southern Iraq who cannot visit the central shrine city of Karbala to mark Arbaeen typically make the shorter trip to Khutwa Imam Ali, which lies around 12 kilometres (seven miles) west of Basra.
Hundreds of thousands did make it to Karbala on Saturday amid massive security in face of the Sunni insurgent threat.
Officials said some 15 million pilgrims will have passed through the city by the end of the commemorations, including some 200,000 from outside Iraq.
Waves of mourners swamped Hussein`s shrine, parading their remorse for not defending him by beating their heads and chests in rituals of self-flagellation.
"I have been walking for 12 days," said Adil Salim, a devotee from Basra. "Despite the threats and the exhaustion, we insist on taking part in these commemorations.
"We will never stop, no matter what the terrorists do."
Sad songs blared from loudspeakers throughout the city and black flags fluttered alongside pictures of Hussein and his half-brother Imam Abbas, both of whom are buried in the city.
Karbala governor Amal al-Din al-Har told AFP that while services had so far gone smoothly, the province`s power and road networks were overwhelmed by the sheer number of pilgrims.
Some 35,000 police and troops were deployed to provide security.
Among them were 500 policewomen charging with assisting in checkpoint searches, as well as sonar detectors and sniffer dogs, according to Lieutenant General Othman al-Ghanimi, who commands forces across central Iraq.
This year is the first time Iraqi troops have been solely charged with security for Arbaeen since the US-led invasion of 2003. American troops, who previously helped with surveillance and reconnaissance, completed their withdrawal from Iraq last month.
While Karbala itself has not suffered any attacks during Arbaeen rituals, there have been a spate of bombings elsewhere in Iraq targeting the Shiite majority community, with the deadliest assaults falling on January 5, when 70 people were killed in bomb blasts in Baghdad and the south.
The seventh century battle near Karbala is at the heart of the historical division between Islam`s Sunni and Shiite sects.
Now-executed dictator Saddam Hussein`s Sunni-dominated regime barred the vast majority of Ashura and Arbaeen commemorations.
Shiites make up around 15 percent of Muslims worldwide. They represent the majority populations in Iraq, Iran and Bahrain and form significant communities in Afghanistan, Lebanon, Pakistan, India and Saudi Arabia.