In the narrow market, which dates to the Abbassid era more than 700 years ago, Iraqis peruse Christmas and New Year's decorations ranging from wreaths and ornaments to red-and-white Santa Claus outfits and figurines.
Many of them are not members of Iraq's dwindling Christian minority but Muslims who have embraced the end-of-the-year holiday season as an occasion to celebrate.
Plastic Christmas trees are available in green and white, some boxed up and others on display, including one that sells for $200 and features built-in lights.
The area is crowded with customers, and the workers carting boxes of decorations who pass every few minutes struggle to get through.
"Demand was unusually high this year... this is the first time we sold this amount," says Ali, who has worked in the shop for 10 years.
"We did not expect this demand," he says, pointing to shelves emptied of decorations except for Santa costumes and some ornaments.
He speculates that there is heightened demand because "people are looking for an outlet".
They have ample reason to -- Iraq has suffered through a year that saw the brutal Islamic State (IS) jihadist group overrun large parts of the country, displacing hundreds of thousands and leaving thousands dead.
At another shop, Safa -- who goes by the name "Abu Hadaya," meaning "Father of Gifts" -- says sales have been unprecedented.
'PEOPLE WANT TO REJOICE'
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"I have sold gifts and decorations for 30 years and this is the first time I have witnessed (demand) to this extent. I sold all the Christmas and New Year's decorations," he says.
Aside from a lone Christmas tree and a few Santa figurines, his shop is now stocked up for Valentine's Day, the next major gift-buying holiday.
"People want to rejoice this year because of the sadness caused by (IS)," Abu Hadaya says.
Additionally, this Christmas and New Year's do not fall during Muharram or Arbaeen, when Shiite Muslim Iraqis mourn the death of Imam Hussein, one of the most revered figures in their faith, and holiday decorations are discouraged.
"This year, I sold 10 times more than past years," says Bassem Jarjis, a Christian shop owner in Shorjah.
He too put the increased sales down to Iraqis wanting to celebrate to escape the difficult times.
"We are looking for joy to forget the suffering," Jarjis says.
Ali Abdulzahra, a Shiite from the shrine city of Najaf carrying two massive bags of decorations, agrees.
"People need to celebrate more this year because many of them were harmed by what happened, and they love to get themselves out of sadness," he says.
Ahmed Khaled, a Sunni Muslim from Baghdad's northern Adhamiyah area, asks a seller wearing a Santa hat for a massive 1.75 metre (nearly six-foot) Christmas tree because he thinks his current one is too small.
The birth of Jesus, who is considered a prophet by Muslims, "reflects joy and delight," Khaled says, adding that he has been putting up decorations since his childhood.
"We are used to the situation and the explosions," he says, referring to frequent bombings in Baghdad.
"If we don't celebrate, the country dies."