The town’s police chief says the blast occurred at about 1100 (0800 GMT) when the market was full of shoppers.
Talafar, about 150km (90 miles) from the Syrian border, is a centre for Iraqi insurgents and thought to be a staging-post for foreign fighters.
Police said there were eight other attacks in Baghdad on Tuesday, including another suicide car bombing, three roadside bombs and four drive-by shootings. Five people are reported killed.
