Windows of nearby shops and buildings were left shattered by the explosion and motorcycles damaged.
Lahore deputy inspector-general of operations, Dr Muhammad Abid Khan, told Geo News that the investigation was in the initial stages and the nature of the blast was being ascertained.
The police official said the blast caused a 1.5 feet-deep crater in the ground. The injured people were shifted to Mayo Hospital.
Scores of people come every day to the area where a number of market places and a variety of businesses are located.
Mayo Hospital officials said four people are in critical condition, with the doctors trying to save their lives. The medics have given first aid to other injured people.
The area has been cordoned off and police officials are gathering evidence from the scene of the crime.
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