The blast hit a bus and over half a dozen other vehicles at a spot near the Safari Park in Karachi, police and witnesses said.
The bus was carrying protesters to a rally organised to mark 'Yum-al-Quds', which is observed on the last Friday of the month of Ramzan to show solidarity with the Palestinians.
Most of the injured were in the bus.
Footage on television showed the rear of the bus had borne the brunt of the blast.
Officials at Jinnah Hospital said they had received one body and 11 injured people.
Some of the injured were in serious condition, they said.
Police officials at the site told reporters that the blast was apparently caused by an explosive device planted near the wall of an electricity sub-station.
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The explosion also damaged the wall of the sub-station and the pavement.
The blast came a day after heavily-armed Taliban terrorists, donning military uniforms and suicide vests, stormed the Kamra airbase believed to house nuclear weapons, triggering a fierce gun battle that left nine attackers and two soldiers dead.