Officials said two Iraqi security forces personnel were also wounded inside the Green Zone. There was no immediate claim of responsibility.
The military said the incident would not go without "prosecution and accountability".
US troops invaded Iraq in 2003 and left in 2011 but returned in 2014 after Isis overran large parts of Iraq.
Frequent attacks targeting the US Embassy and vehicles transporting equipment for US troops have led Washington to threaten to close its Baghdad diplomatic mission and sparked a diplomatic crisis prior to the US presidential election.
The attack comes after an announcement by the Pentagon it would reduce troop levels in Iraq from 3000 to 2500.
A planned drawdown has been underway in Iraq for months, with coalition troops withdrawing from several Iraqi bases.
The New York Times also reported yesterday that outgoing US President Donald Trump considered attacking an Iranian nuclear facility but was talked out of it by advisers.
In mid-October, Iran-backed, mostly Shia, militia groups said they would temporarily halt attacks targeting the American presence in Iraq, including the embassy.
That came with the condition that US-led coalition troops withdraw from the country in line with a non-binding resolution passed in the Iraqi Parliament in January.
The resolution was passed by mostly Shia lawmakers and urged the Government to take action and expel US-led coalition troops from the country.
The resolution followed the Washington-directed airstrike that killed top Iranian General Qassim Soleimani, the head of Iran's elite Quds Force, and powerful Iraqi militia leader Abu Mahdi al-Muhandis, outside Baghdad airport.
US officials, supportive of withdrawals in principle, have insisted they take place based on a scheduled timeline.
Most Iraqi government officials agree with a gradual drawdown and face pressure from Iran-aligned groups who prefer an immediate exit.
Iraqi forces have increasingly been conducting anti-Isis operations without US assistance, triggering the coalition to begin a scheduled drawdown in March that was conceived late last year.
Assistance has become increasingly limited to high-level capabilities that Iraqi security forces lack, such as surveillance and air support.
- AP