The blast was so strong that the car flew up into the air opposite Moscow's National hotel, which faces the Kremlin and the Red Square, Russian agencies said on Tuesday.
Aljazeera correspondent in Moscow said there were no official reports yet regarding the party behind the attack but as "it occurred right after the Russian parliamentary elections, one might conclude that it was a terrorist act"
Russian agencies reported that the blast was set off by a "female suicide bomber".
Reuters correspondent Oliver Bullough said he saw the severed head of a blonde woman next to a briefcase outside the National Hotel, several hundred metres from the Kremlin.
"We heard a big blast and then smelled burning meat," said a
female teenager interviewed by Russian television at the scene.
It was not immediately clear if President Vladimir Putin was inside the Kremlin at the time of the explosion, with the Kremlin press service refusing to confirm the Russian leader's location.
The explosion occurred two days after parliamentary elections in which allies of President Vladimir Putin scored a big victory.
Last Friday, 40 people were killed and more than 150 injured in a bomb attack on a train in the breakaway Russian republic of Chechnya.