The bloodshed came on the heels of a string of attacks in Turkey, blamed on jihadists but also on Kurdish rebels.
The bomb aimed at a convoy of military service vehicles, Ankara governor Mehmet Kiliclar said, quoted by the CNN-Turk and NTV channels.
Plumes of smoke rose from the scene, close to the headquarters of the Turkish military and the parliament.
The powerful blast was heard all over the city, sending residents to their balconies in panic, an AFP correspondent said.
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"The terror attack was carried out when the vehicles were waiting for traffic lights at a road junction," it added.
Prime Minister Ahmet Davutoglu cancelled a planned visit to Brussels tomorrow after being briefed, his office said.
Ambulances and fire engines were sent to the scene, which is near the Turkish military headquarters and the parliament. Wounded victims were seen being taken away on stretchers.
NTV television said the explosion happened near a residential block for top-level military staff.
The spokesman for the ruling Justice and Development Party (AKP), Omer Celik, said on Twitter he strongly condemned the "act of terror".
"But our determination to fight (terror) will become even greater," he added.
Turkish police threw a security cordon around the area. A second blast later rocked the area, the AFP correspondent said, but media said this was police detonating a suspicious package.
There was no immediate indication about who carried out the attack.
The Islamic State group has been blamed for a string of bombings in the country since the middle of last year but the outlawed Kurdistan Workers' Party (PKK) has also killed dozens of soldiers in attacks mainly in the southeast of the country.
Eleven people, all German tourists, were also killed on January 16 when a suicide bomber blew himself up in the tourist heart of Istanbul.