The bombings, apparently aimed at sowing sectarian discord in a country well known for Shia-Sunni harmony, came as thousands of Hazaras gathered to protest over a multi-million-dollar power line.
Charred bodies and dismembered limbs littered the scene of the attack, with ambulances struggling to reach the site as authorities had overnight blocked key intersections with stacked shipping containers to control movement of the protesters.
"Based on initial information, the attack was carried out by three suicide bombers... The third attacker was gunned down by security forces."
The wounded overwhelmed city hospitals, officials said, with reports emerging of blood shortages and urgent appeals for donors circulating on social media.
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The Taliban, who are in the middle of their annual summer offensive and are more powerful than IS, strongly denied any involvement in the attack.
IS claimed the bombings in a statement carried by its affiliated Amaq news agency, calling it an attack on Shiites.
The attack represents a major escalation for the IS group, which so has largely been confined to the eastern province of Nangarhar.
The National Directorate of Security, Afghanistan's main intelligence agency, said the attack was masterminded by Abu Ali, an IS commander in Nangarhar's volatile Achin district.
The attack came as thousands of demonstrators gathered to demand that a multi-million-dollar power line pass through their electricity-starved province of Bamiyan, one of the most deprived areas of Afghanistan with a large Hazara population.
"Such attacks are a reminder that the conflict in Afghanistan is not winding down, as some believe, but escalating, with consequences for the human rights situation in the country that should alarm us all."
In a statement, Afghan President Ashraf Ghani said he was "deeply saddened" by the carnage, adding that the casualties included security officials.