A truck packed with explosives in Baghdad's Karrada neighborhood killed at least 125 and wounded over 200 on Saturday night when residents were celebrating Ramadan.
The Islamic State claimed responsibility for the attack, which wiped out many families as they were gathered hours after breaking the fast on the holiday to mark the end of Ramadan.
The slain included 25 children and 20 women in the suicide bombing.
"The killing and maiming of children is a grave violation under international humanitarian law," UNICEF said in a statement. "As violence across Iraq intensifies, children continue to pay the heaviest price."
A refrigerator truck packed with explosives plowed outside a shopping complex in a predominantly-Shia area and blew up. The building housed stores and coffee shops, where many were shopping and watching soccer matches.
ISIS released a statement on its affiliate websites, giving the identity of the suicide bomber.
"Suicide bomber Abu Maha al-Iraqi blew up his vehicle at al-Karrada in central Baghdad," the militant group was quoted as saying by Iraqi News.
A second bomb exploded in the northern Baghdad, which is also a Shia-dominated area, a few hours later in al-Shaab area, killing five people and wounding 16.
The attacks came a week after Iraq reclaimed the key city of Falluja which was one of the first towns to fall into ISIS' hands in January 2014.
"This is a cowardly and heinous act of unparalleled proportions, to target peaceful civilians," said UN Iraq envoy Jan Kubiš. "The terrorists of Daesh who have suffered defeats at the battlefront are seeking to avenge their losses by targeting vulnerable civilians," he added.
Prime Minister Haider al-Abadi visited the site of carnage, but people were angered by the government's laxity in preventing the attack. In a video posted online, people were seen throwing bottles of water, buckets, shoes, and stones on his SUV convoy as he left the area.
"I understand the emotional feelings and actions that occurred in a moment of sadness and anger," he said in a statement.
Abadi announced a three days of national mourning for the victims of the attack.
Buildings in the area were set ablaze by the bomb, and some were badly charred. Firemen worked for over 12 hours to douse the fire.
Iraq is still using bogus bomb detectors at the checkpoints, which were determined as fake by the government six years ago.
Abadi ordered the devices to be rolled back from Baghdad and other provinces, and replace them with improved inspection systems. A fresh probe was launched against the manufacturers of the so-called bomb detectors.
"These attacks only strengthen our resolve to support Iraqi security forces as they continue to take back territory from ISIL [ISIL], just as we continue to intensify our efforts to root out ISIL's terrorist network and leaders," National Security Council spokesman Ned Price said in a statement.