The blast in Sitra island, the scene of frequent clashes between security forces and Shiite demonstrators, comes days after the Sunni-ruled kingdom announced it had foiled an attempt to smuggle weapons from Iran.
Police blocked routes leading into the island following the explosion -- the latest in a series of blasts that have recently targeted police in Shiite villages, witnesses said.
Shiite-led protests since 2011 demanding reforms in the Sunni-minority ruled Gulf kingdom have sparked clashes with security forces in which at least 89 people have been killed, human rights groups say.
Manama recalled its ambassador from Tehran over the weekend in protest at "hostile" comments by Iranian leaders.
On Sunday, Iranian foreign ministry spokeswoman Marzieh Afkham accused Bahrain of making "unfounded allegations" aimed at creating "tension in the region".