One person died and 11 were injured in a blast near Iqbal Market and New Memon Mosque in Karachi's Kharadar area, according to Karachi Administrator Murtaza Wahab.
Wahab identified the deceased as a woman named Sania, wife of Khalid.
As per footage shown on DawnNewsTV, motorcycles and automobiles, including a police vehicle, suffered damage as people tried to put out fire.
A press release from the Karachi police's media cell said an improvised explosive device (IED) was responsible for the blast. It said that Assistant Sub-inspector Badaruddin was among the injured, adding that he was "out of danger".
"One police pick up and a few other vehicles are damaged in the incident. Crime scene unit has secured the place of incident. BD (bomb disposal) team is working to establish the nature of explosion," the press release said.
Enemies will be dealt with iron hands: PM Shehbaz
Prime Minister Shehbaz Sharif condemned the incident and said that enemies of people's lives and property will be "dealt with iron hands".
In a statement carried by Radio Pakistan, he offered condolences to the family of the deceased woman and the 11 injured, as he directed the chief minister to provide the best medical facilities to the injured.
PM Shehbaz issued directives to apprehend those involved in the incident immediately. He assured the Sindh government that the federal government would extend its full support in doing so.
"All provinces should improve security arrangements to ensure protection of lives and property of the people," he said.
Sindh Information Minister Sharjeel Memon told DawnNewsTV it was an "unfortunate incident", adding that police and Bomb Disposal Squad had reached the site of the blast.
"God forbid, if it is a terror attack, the government is determined to take stern action and we will not let them [terrorists] go scot-free."
The minister said no matter outfit the terrorists belong to, "we will take strong action against them."
He said that Sindh Chief Minister Murad Ali Shah had directed hospitals to provide the best possible treatment to all those injured.
When asked whether he had any information about a bomb planted in a motorbike as being reported by various sections of the media, the minister said he would not believe any information other than the one given to him through official channels.
Sindh Chief Secretary Dr Muhammad Sohail Rajput took notice of the incident and issued instructions for emergency to be declared at Dr Ruth Pfau Civil Hospital Karachi and Jinnah Postgraduate Medical Centre.
The chief minister sought a report from Sindh Inspector General of Police Mushtaq Ahmed Mahar on the incident.
The blast tonight is the second one to terrorise Karachi within the span of a week. Last Thursday, one passerby was killed and at least nine injured when an improvised explosive device (IED) planted in a motorbike went off in Saddar.
Former Sindh governor Imran Ismail condemned the incident and called for immediate medical aid to be provided to those injured.
"Anti-peace forces have once again become active in Karachi. The recent incidents are part of a well planned conspiracy," he said.