"A blast went off at around 4:00 am (0200 GMT)... Near a Hezbollah position in Sbouba... Causing deaths and injuries," said the source, adding that the explosion was caused by a car bomb.
Residents of the area meanwhile said they heard the sound of sirens as ambulances headed towards the scene of the blast.
The source said members of the powerful Shiite movement Hezbollah and security forces quickly deployed in the area.
On November 19, two suicide attackers targeted the Iranian embassy in southern Beirut, killing 23 people.
Analysts say the blasts are linked to the involvement of Tehran-backed Hezbollah in Syria's war.
Hezbollah has deployed thousands of its men into Syria, to fight alongside troops loyal to President Bashar al-Assad.