Indonesian police officials said they believe a car bomb caused the explosion on Tuesday that shook the Marriot Hotel in the Indonesian capital's main business district, killing at least 13 people and injuring dozens others.
Earlier, Jakarta police said the blast originated in the basement of the hotel.
Flames and thick clouds of smoke billowed from the lobby area of the hotel after the blast. Cars and other vehicles were set ablaze while staff and guests were evacuated.
The Marriot is located close to the diplomatic area, home to dozens of Western embassies and consuls, including the residence of the US ambassador.
Indonesian Defence Minister Matori Abdul Jalil condemned the
blast as a "terrorist attack".
Abu Bakar Bashir is awaiting a
verdict in the Bali bombing case
The explosion comes just two days before a court is due to hand down the first verdict in the trials of Islamists accused of carrying out the bombing of two nightclubs on the Indonesian resort island of Bali last year.
Influential Muslim cleric Abu Bakar Bashir is among those on trial, accused of leading the Jemaa Islamiyyah.
The group has been accused of a series of attacks on Western targets in Indonesia including last October's Bali nightclub bombing which killed over 200.
"Intelligence agencies have warned for months now of the possibility of attacks and the bulk of Jemaa Islamiyyah remains at large," said security expert Andrew Tan at Singapore's Institute of Defence and Strategic Studies.
A court in Bali is scheduled to deliver its first verdict on Thursday in the trials of those charged with planting the Bali bomb.