The assailants struck at midday, opening fire on a restaurant before getting into a car and blowing themselves up at a nearby security checkpoint, officials said.
They left a trail of destruction, with charred bodies scattered on the ground near the burnt-out wrecks of cars, buses and trucks, an AFP correspondent on the spot said.
The attack was quickly claimed by the Islamic State group, which appears to be switching to insurgent attacks after suffering a string of setbacks on the battlefield.
The Sunni extremists have been sliding from defeat to defeat in Iraq and Syria, three years after declaring a cross-border "caliphate".
Thursday's attack killed at least 74 people, including seven Iranians, and left another 93 wounded, said Abdel Hussein al-Jabri, deputy health chief for the mainly Shiite province of Dhiqar.
Security sources said the attackers were disguised as members of the Hashed al-Shaabi, a mainly Shiite paramilitary alliance which has fought alongside the army and police against IS in northern Iraq.
Rescue workers and members of the security forces placed bodies in ambulances and cleared away rubble and the carcasses of burnt-out cars from the site.
Nearby shelters built of corrugated metal were reduced to scraps of metal, twisted by heat.
The area targeted is on a highway used by Shiite pilgrims and visitors from neighbouring Iran to travel to the holy cities of Najaf and Karbala further north, although Dhiqar has previously been spared the worst of Iraq's violence.
IS group claim
IS claimed responsibility for the attacks in a statement carried by its Amaq propaganda arm.
It said several suicide bombers had staged the assault on a restaurant and a security checkpoint, killing "dozens of Shiites".
The Sunni extremist group regularly stages attacks in Iraq, where it has lost swathes of territory to US-backed pro-government forces.
Iraqi forces recaptured the city of Tal Afar and the surrounding region from IS on August 31, adding to the pressure on the jihadists.
Thursday's attacks come as Iraqi forces backed by tribal fighters closed in one of the last IS bastions in the country: the Al-Qaim area on the border with war-ravaged Syria.
On Wednesday, an AFP correspondent in that area saw several artillery units positioned around the towns of Rawa and Anna, 100 kilometres (60 miles) from the border with Syria.
The group's only other stronghold is Hawija, in Kirkuk province some 300 kilometres north of Baghdad.
But despite these setbacks, the extremist group still has hundreds of fighters ready to carry out suicide attacks.
In addition, any military offensive in Hawija is expected to be postponed due to a planned referendum on Kurdish independence on September 25.
Acting at the request of Prime Minister Haider al-Abadi, the Iraqi parliament on Thursday sacked the governor of Kirkuk over his decision for the northern province to also take part in the Kurdish referendum.
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