Both Nouri al-Maliki and Mr Ban escaped injury in the blast which shook the heavily fortified Green Zone as the two men were holding a press conference.
Two Iraqi security guards outside Mr Maliki's office were slightly injured in the attack.
Mr Ban, on his first visit to Iraq, was visibly shaken by the attack.
The blast came just as Mr Maliki had finished telling reporters that Mr Ban's visit was a sign that Iraq was on the road to stability.
"We consider [his visit] a positive message to world in which you [Mr Ban] confirm that Baghdad has returned to playing host to important world figures because it has made huge strides on the road toward stability," he said.
The men quickly regained their composure and continued taking questions from reporters.
Mr Ban's visit to Iraq is the first by a UN secretary general since his predecessor, Kofi Annan, came to Baghdad in November 2005.
In August 2003 abomb attack on the UN headquarters in Baghdad killed 22 people, including Sergio Vieira de Mello, the widely-respected UN envoy.
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You can hear the blast in the video:
http://www.telegraph.co.uk/news/main.jh ... ban122.xml
Scary situation, but when you are in Iraq, it's no surprise.
