At least 20 Iranian pilgrims were killed and up to 40 people wounded when two buses collided near a marketplace in south of Baghdad on Friday, the police said.

The two buses were carrying Iranian pilgrims and heading to the holy shiite city of Najaf, when they crashed and overturned into a nearby busy vegetable marketplace in al-Kefil area, some 40 km south of the city if Hilla, the source told Xinhua on condition of anonymity.

"All the deaths were Iranian pilgrims and many Iraqis at the market were among the wounded people," the source said.

Hilla is the capital city of Babil province, located some 100 km south of Baghdad.

Hundreds of thousands of Iranian pilgrims flock to Iraq to visit holy Shiite shrines and mosques since the U.S.-led invasion in 2003 that toppled Saddam Hussein's Sunni regime and set up Shiite-led government.