The assault raises further questions over the credibility of the election, Iraq's first since 2010, and comes some 10 years after the US-led invasion that ousted Saddam Hussein and aimed to usher in a stable democracy but instead unleashed brutal violence which continues to plague the country.
Supporters of Muthanna Ahmed Abdulwahid, a Sunni Arab candidate for the Azimun Ala al-Bina (Determined to Build) party, a small local list, had been gathered at around lunchtime in the restive city of Baquba, 60 kilometres (35 miles) north of Baghdad.
As they were meeting, a militant threw a grenade before a suicide bomber then blew himself up, a police colonel and a medic at Baquba hospital said.
At least 25 people were killed and 60 others were wounded, the officials said, though Abdulwahid appeared to have been unharmed.
Diyala province, of which Baquba is the capital, is among Iraq's most violent -- 560 people were killed there last year, according to Britain-based NGO Iraq Body Count, which said it suffered the highest per capita rate of civilian deaths in the country.
Iraq has been plagued by attacks against election candidates ahead of provincial council polls due on April 20, with 12 hopefuls killed already, according to an AFP tally.
Diplomats have also raised concerns over a government decision to postpone elections in two provinces which, combined with the fact that four were never slated to vote, means that just 12 of Iraq's 18 provinces will cast ballots.
The polls will be the latest in Iraq since a March 2010 parliamentary election, and the first since the withdrawal of US forces at the end of 2011.
They come with the country mired in a political crisis that has pitted Prime Minister Nuri al-Maliki against several of his erstwhile national unity cabinet partners, and amid more than three months of anti-government protests by the Sunni Arab minority.
Also on Saturday, a civilian was killed and two anti-Qaeda militiamen were wounded in a bomb blast northwest of Baghdad, and security forces found the body of a policeman who had been kidnapped near the capital a day earlier.
Violence has spiked markedly ahead of the provincial elections, with 271 people killed in March, the highest such figure since August.