Colonel Mudhher al-Qaisi, police chief in the town of Baiji, said the attack was on a group of shepherds in a vehicle in a farming area. Relatives said some of those killed were fleeing on foot after the U.S. military arrived in the area.
"This is a criminal act. It will make the relations between Iraqi citizens and the U.S. forces tense. This will negatively affect security improvements," Qaisi told Reuters.
A U.S. military spokeswoman, Lieutenant-Colonel Maura Gillen, said the helicopter fired on the vehicle after observing "suspicious activity". She said the driver had ignored warnings to stop.
The incident is the latest in a string of U.S. airstrikes in which civilians have been killed. It comes at a bad time for the U.S. military, which has been working hard to soothe tensions with Prime Minister Nuri al-Maliki's government over the shooting of a copy of the Koran, the Muslim holy book, by a U.S. soldier earlier this month.
United Nations officials have expressed concern at the number of civilians killed in airstrikes in Iraq and said more care must be taken in military operations to protect them.
The U.S. military said the incident was under investigation.
"Coalition forces regret the loss of innocent civilian lives," said Navy Captain Gordon Delcambre in a press statement. "Terrorists continue to show their disregard for human life by endangering children with their illegal and violent.
The U.S. military says insurgents often deliberately hide among civilians and previous air strikes on suspected militant hideouts have resulted in civilian deaths.
CORPSES IN SHEETS
Reuters pictures showed relatives of the dead standing beside corpses covered by white sheets outside a mosque in Baiji, an oil refining town 180 km (110 miles) north of Baghdad.
"There were two boys, one was eight and the other was 11," said police Major Ahmed Hussein, giving the ages of two of the victims.
A doctor at Baiji hospital who asked not to be named said it had received eight bodies following the incident early on Wednesday evening. One body was that of a 60-year-old man.
In October 2007, the United Nations mission in Iraq urged U.S. forces to pursue a "vigorous" probe into an airstrike that killed 15 women and children and said its findings must be made public so that lessons could be learned.
They were killed during an operation targeting senior leaders of al Qaeda in the Lake Thar Thar area 80 km (50 miles) northwest of the Iraqi capital. The U.S. military has not made public its investigations into such incidents.
Iraqi police have also raised questions about another U.S. military operation in which 11 people were killed on Wednesday.
U.S. officials said troops shot dead 11 militants in eastern Baghdad on Wednesday, but police and several residents said at least some of the dead were civilians killed by U.S. snipers.