Blasts in other Iraqi cities have killed dozens this week, underscoring warnings that insurgents would attempt to disrupt the vote with violence. An al-Qaida front group issued a statement on Friday telling people not to leave their homes on election day.
A group of Iranian and Iraqi pilgrims were waiting to board the bus after visiting a famous shrine when the blast occurred about 100 yards (meters) away, a witness said.
"I was shocked by the scene, pools of blood and people lying on the ground soaked with their own blood," said Ahmed Fakhir, 21, an Iraqi translator who was with the Iranian pilgrims.
Police blocked access to the blast site and prevented all but the wounded from entering the hospital, fearing more attacks. Earlier this week, a suicide bomber in the city of Baqouba rode in an ambulance to a hospital with the wounded from another attack and blew himself up there.
Jawad al-Garaawi of the Najaf provincial council, said the car bomb killed one Iraqi and two Iranian pilgrims and wounded more than 50 others.
Director Radwan al-Kindi of the Najaf Health Department confirmed the deaths.
The attack came a day before Iraqis vote in parliamentary elections to determine who will govern the country and deal with deep sectarian tensions as the United States presses ahead with plans to withdraw all its forces by the end of next year.
Najaf, 100 miles (160 kilometers) south of Baghdad, holds the shrine of Imam Ali, where Saturday's blast occurred, and has close religious ties with neighboring Shiite power Iran.