In the incident, which unfolded Sunday evening during services, two priests were killed, local residents said.
A person who was inside the church said that at least one of the religious leaders was shot by the militants at point-blank range.
The death toll is expected to rise as some of the released hostages suffer serious injuries, Pascal Warda, a member of the Assyrian Christian community, told DPA.
She added that tightened security measures were being implemented at Christian schools across Baghdad.
Iraqi forces stormed the Our Lady of Salvation church, an Assyrian Catholic temple, hours after militants had taken about 100 people hostage inside the building.
Residents reported explosions and gunfire as the militants took control of the church and then again as the police intervened.
Baghdad Security Chief Qassem Atta said that there were eight militants who were killed as Iraqi forces moved to end the seizure.
Earlier reports said that there were only five militants in the attack, which took place in al-Karrada, a mixed Shiite-Christian neighbourhood.
It is not clear how many members of the security forces were killed in the attack.
The militants, who claimed they belonged to the Al Qaeda-affiliated Islamic State of Iraq, were demanding the release of Islamist militants members being held in Iraq and Egypt.