Government officials said a leader of the ruling Congress party was the target of the blast. Chaudhary Lal Singh, who until his recent election to the lower house of India's parliament was the health minister in Kashmir, was unhurt in the attack.
An improvised explosive device had apparently been planted beneath a village road in Kishtwar area in eastern Kashmir, about 265km from the state's winter capital Jammu.
As Singh's motorcade passed by, the device was detonated by remote control. A police escort vehicle bore the full impact of the blast.
Among those killed were a deputy superintendent of Kashmir police, Mushtaq Ahmad Mir, and five policemen, including the escort vehicle's driver.
Ten injured policemen have been airlifted to Jammu for specialist treatment, government officials said.
Singh was due to address a series of public rallies in Kishtwar, a mountainous district that has been a hub of the 15-year-old rebellion that has claimed thousands of lives across the region.
In a separate incident, official sources said, Indian troops killed three suspected infiltrators in Kupwara district - northwest of the summer capital Srinagar - soon after they had sneaked into the Indian side of Line of Control, the de facto border that splits Kashmir between Indian and Pakistani control.
Tirath Acharya, a spokesman for India's Border Security Force, said the gun battle between the fighters and Indian security forces took place in Kupwara's Macheal sector and lasted for several hours.
Indian-ruled Kashmir is again the
scene of almost daily gun battles
"They were hiding in a private house that we raided soon after learning about their presence," he said.
However, in neighbouring Kandi area, a policeman was killed and two others were wounded when a security patrol was ambushed by separatist fighters.
Also on Friday, tragedy struck Beeru in the central district of Budgam where two boys aged 10 and 13 were killed when a hand grenade they had found in a paddy field exploded in their hands.