A group calling itself Al-Nusra Front in Lebanon, after a Syrian Al-Qaeda affiliate, said it was responsible for the blast and said it was a suicide attack, in a statement on social media.
A security official told AFP the bomb exploded in front of Hermel's main government building, which houses administrative offices as well as police and security posts.
Health Minister Ali Hassan Khalil said three people were killed and 31 wounded in the town located only about 10 kilometres from the Syrian border.
It was the first bombing to hit Hermel since the Syrian conflict erupted in March 2011, and the fifth major assault on a Hezbollah stronghold in Lebanon since the Iranian-backed Shiite movement admitted it was fighting alongside President Bashar al-Assad's forces in Syria.
"By the grace of God, an earthquake has shaken the bastion of Iran's party in Hermel, in a martyrdom (suicide) attack by one of the lions of Al-Nusra Front in Lebanon," said the statement posted on Twitter.