A car bomb in the northern Iraqi city of Kirkuk has killed at least 25 people just after US troops handed over full control of Iraq's cities to domestic security forces.
The bomb, which wounded at least 40 people, struck a busy market in a largely Kurdish part of Kirkuk.
Police said the death toll could rise.
Many Iraqis fear the US pullback from towns and cities leaves them open to attack.
Iraq's Prime Minister Nuri al-Maliki had declared a public holiday to mark National Sovereignty Day.
Iraqi security forces paraded in tanks and armoured vehicles across Baghdad as they took control of towns and cities nationwide.
US President Barack Obama has said that American troops have met their deadline to withdraw from Iraqi cities and towns handing over control to local forces.
One hundred and thirty one thousand US troops will remain in Iraq and the total is not expected to drop below 128,000 until after the Iraqi national election in January.
The complete withdrawal is expected by the end of 2011.
The Prime Minister said the nation's joy at the handover was mixed with sorrow for 'beloved friends and relatives' who had been 'targeted by terror'.
But he also insisted Iraq's army and police were up to the task of defending the country in the wake of the US pullback.
President Jalal Talabani thanked US forces for their role in overthrowing Saddam Hussein in 2003, and in the years of bloodshed that followed.
'They bore the burden and dangers against the most cruel regime and against the mutual enemy - the terror,' he said in a television address.
The handover coincided with a US army announcement that four of its soldiers died from combat-related injuries yesterday, taking to 4,321 the number of US troops killed since the invasion.
General Ray Odierno, the top US commander in Iraq, told reporters he believed Iraq was now a better country.
Today's pullback is part of a landmark security agreement signed last November between Baghdad and Washington covering the fate of the 133,000 US troops still in Iraq.
In the wake of bombings that have already killed more than 200 people this month, all leave for Iraqi security personnel has been cancelled.
Motorcycles, a favoured form of transport for several recent bombers, have been banned from the streets.
Across Baghdad, tanks and armoured vehicles manned by soldiers and police were decorated with artificial flowers, flags and banners, as nationalistic songs and popular music played.
