The Iraqi army has said it found 15 beheaded corpses, both men and women, after soldiers raided an old military base.
The base near Latifiyah, around 40km south of Baghdad,
is now believed to be used by insurgents.
The soldiers began the operation after reports that some Shi'ite pilgrims on their way to the holy cities of Karbala and Najaf had disappeared near Latifiyah.
In a separate incident, gunmen in Baghdad have shot dead a senior official in the Iraqi Interior Ministry in a drive-by shooting.
In an Internet statement, al-Qaeda's wing in Iraq said it was behind the assassination of the man, who was a police major general and director of immigration.
Italy disputes US version of shooting
Meanwhile, Italy's Foreign Minister has told his country's parliament that his government did not believe the US version of events leading to the fatal shooting of an intelligence officer by US troops in Iraq.
Gianfranco Fini said he wanted the soldiers responsible to be identified and punished for the shooting of Nicola Calipari, who was buried in a state funeral in Rome yesterday.
Mr Calipari's car was fired on by soldiers at a US checkpoint while taking a freed Italian journalist to Baghdad airport.
Mr Fini said claims by the US military that the car had been speeding and had failed to heed a warning to stop did not tally with his information.
