One of the injured was British, but nationalities of the dead contractors and the second injured person has not been confirmed, a Foreign Office spokeswoman said.
All five contractors had been traveling in a sports utility vehicle which was attacked on Sunday morning, according to an Iraqi police report.
"A private security convoy was attacked this morning, three people were killed and two others injured," said a spokeswoman for Britain's Foreign Office, speaking on condition of anonymity in line with government policy.
"None of those killed were British. One of the injured was a Briton, the identity of the other injured man is not known," she said.
She said the condition of the two injured contractors is not known, but confirmed both are being treated in a hospital in Baghdad.
The contractors were working for London-based private security company Aegis Defense Services Ltd., a British official said, speaking on condition of anonymity, because he was not authorized to speak to the media.
Sara Pearson, spokeswoman for Aegis, one of the biggest security contractors in Iraq, said she was checking reports of the incident.
The company, established in 2002 by Tim Spicer, a former British Army officer, is contracted by U.S. authorities to provide services including "protection of both civilian and military personnel traveling throughout the country."