Iraqis who said they lost friends and relatives claimed the attack hit a village just outside the town of Qaim, on the Syrian border, where a wedding had just been celebrated.
US generals admitted 41 people were killed, but insisted the strike, conducted from a helicopter at 3 am Wednesday (2300 GMT Tuesday), targeted a safe house used by foreign fighters in a desert area.
A US marine general responsible for Al-Anbar province where the raid was conducted, ridiculed claims that those killed were wedding guests, saying "I don't have to dignify their allegations."
But a well-off family told AFP it lost 26 people in the attack, which unleashed mayhem after about 100 people gathered to celebrate a wedding in the hamlet of Makredib.
"The wedding started at midday. At 10:00 pm (1800 GMT), I returned to my house, about one kilometre (less than a mile) away. At around 3:00 am I heard heavy bombing," said Taleb al-Harun, who said his wife, sister and nephew were killed.
"I was crazy with fear. I ran out and saw everyone dead. They were lying in the street, I think they were trying to get out of the house, but they were killed outside," he said at Ramadi hospital, where the wounded were taken.
But US Marine Major General James Mattis dismissed claims the victims were wedding guests.
"How many people go to the desert 10 miles (16 kilometers) from the Syrian border and hold a wedding many miles from the nearest city," Mattis asked.
"There were two dozen military-aged males," said Mattis who commands the 1st Marine Division.
Another US official said "coalition forces carried out a military operation on a house suspected of sheltering foreign fighters ... A helicopter fired on the house, killing 41 people."
Residents of Qaim said US helicopters opened fire after wedding goers had fired in the air, a traditional way to celebrate in the Arab world.
Footage of bodies wrapped in blankets and loaded on trucks was broadcast on Arab satellite news channels, which said those killed were mostly women and children.
Asked about the footage, Mattis said: "I have not seen the pictures, but bad things happen in war."
The coalition's military spokesman, US Brigadier General Mark Kimmitt, said, however, that a probe would be launched into allegations that those killed were wedding revellers.
"Certainly because of the interest that has been shown by the media we're going to have an investigation. Some of the allegations that have been made will cause us to go back and look at this," he said.
Kimmitt said the attack was based on "significant" intelligence that armed insurgents were gathering in the remote western desert near the Syrian border.
But, speaking in Fallujah, 50 kilometers (30 miles) west of Baghdad, Mattis was adament US troops had nothing to apologize for.
"It is the enemy who owes the entire world an apology," he told journalists, pointing to the recent beheading of American businessman Nicholas Berg.
The International Committee of the Red Cross said it was concerned about an "excessive" use of force by the US military after the attack.
"Even if (you came under) fire, there are rules of proportion in retaliation and the absolute need to prevent civilian casualties," the ICRC spokeswoman in Baghdad, Nada Dumani, told AFP.
"We understand that if they are attacked, US forces must retaliate, but while following rules of proportion in the use of force and taking all necessary precautions."