The blast occurred in Kareli area. While three children were killed, six persons, including five kids, were injured, Senior Superintendent of Police of Allahabad Naveen Arora said.
"People have been rushed to various hospitals and we are in the process of joining the dots," he said.
Police said the explosion appeared to have occurred at a scrap dump.
"Prima facie it appears that the children were playing near the scrap dump when the explosion occurred," B P Singh, IG (Law and Order) said in Lucknow.
An Anti-Terrorism Squad team has been rushed to the city to probe the case, he said.
Some of the residents, however, claimed that the bomb was "hurled by an unidentified person who fled immediately", while others said that the explosive device was lying abandoned in a garbage heap and went off when a group of rag-pickers fiddled with it.
