The attack on Sunday morning, which killed at least 13 people, comes as the terror group is under increasing pressure from a US-backed offensive in Mosul.
The Daesh terrorist organisation claimed responsibility for a car bomb blast at a vegetable market in eastern Baghdad on Sunday.
Police and medical sources said the attack killed at least 13 people and wounded 50 others.
The explosion hit the mainly Shia district of Jamila, the sources added.
Reuters reported that Daesh took responsibility for the attack in an online statement.
The group is under increasing pressure from a US-backed offensive in Mosul, its last major stronghold in Iraq, and frequently carries out deadly suicide bombings across the country.