A lorry packed with explosives was detonated in the Karrada district while families were shopping for the holiday marking the end of Ramadan.
It is believed to be the deadliest single bomb attack in Iraq since 2007.
Rescuers said whole families had been killed. Many people were badly burned.
So-called Islamic State (IS) has said it carried out the suicide attack.
Prime Minister Haider al-Abadi was greeted by angry crowds when he visited the mainly Shia Muslim area in the hours after the bombing.
His office said Mr Abadi understood the reaction of residents and would increase security by banning "magic wand" fake bomb detectors and improving vehicle inspections at roads into the city.
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