The explosion, which came during morning rush hour on a busy road near the US embassy and NATO headquarters, killed "mostly" civilians, an interior ministry spokesman told AFP without giving a breakdown.
NATO said three coalition service members had received "non-life threatening wounds" in the attack.
"(They) are in stable condition, and are currently being treated at coalition medical facilities," a spokesman for US Forces-Afghanistan said, without confirming their nationalities.
The attack comes three weeks after the US dropped its largest non-nuclear bomb on the jihadist group's hideous in eastern Afghanistan.
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NATO commander in Afghanistan General John Nicholson said the strike, which triggered global shockwaves, showed there was "no space" for IS in the war-torn country.
Monday's attack comes as the US seeks to craft a new strategy in Afghanistan and NATO mulls boosting troop levels as they face a "stalemate" against the resurgent Taliban.
MRAP (Mine Resistant Ambush Protected) vehicles, which are designed to withstand large explosions, are routinely used by international forces moving around Kabul.
At least three civilian cars were also damaged, with one ablaze, while windows were shattered up to several hundred metres away. Firefighters and ambulances rushed stunned survivors to hospital.
Nicholson has said the US decision to drop the GBU-43/B Massive Ordnance Air Blast on IS hideouts in Nangarhar province last month was a "very clear message" to the group: "If they come to Afghanistan they will be destroyed".
The weapon, dubbed the "Mother of All Bombs", killed at least 95 jihadists, according to the Afghan defence ministry, but fighting in the area has continued.
Last week, two US troops were killed in an operation against IS near where the bomb was dropped. The Pentagon has said it is investigating if they were killed by friendly fire.
Pentagon chief Jim Mattis warned of "another tough year" for both foreign troops and local forces in Afghanistan when he visited Kabul last month.
But NATO chief Jens Stoltenberg told a German newspaper Sunday that the 28-nation alliance was considering boosting its troop strength once more given the "challenging" security situation.
The US has around 8,400 troops in the country with about another 5,000 from NATO allies. Most are taking part in NATO's train, assist and advise mission, though some are also carrying out counter-terror missions targeting IS and Al- Qaeda.
First emerging in 2015, ISIS-K overran large parts of Nangarhar and Kunar provinces, near the Pakistan border, but their part in the Afghan conflict had been largely overshadowed by the operations against the Taliban.
"We have a very good chance of destroying them in 2017," Salvin told AFP recently.
Afghan forces have been straining to beat back the Taliban insurgents since US-led NATO troops ended their combat mission in December 2014.
With more than one third of Afghanistan outside of government control, civilians also continue to bear a heavy brunt, with thousands killed and wounded each year and children paying an increasingly disproportionate price, according to UN figures.