Paramedics on Saturday treated dazed shoppers on the ground, as police searched waste bins for additional explosives.
The military wing of the Popular Front for the Liberation of Palestine (PFLP) claimed responsibility for the blast that also wounded at least 32 people.
A spokesman for Abu Ali Mustafa Brigades said one of its members from Nablus, was the bomber.
"Amir al-Far, one of our men from the Askar refugee camp in Nablus, was responsible for this attack," a PFLP member said.
Witnesses said the ground shook when the blast went off near a dairy shop.
A witness, who was identified only by his first name, Motti, said he heard an explosion in the market. "I thought maybe fireworks, or a gas canister. But then I saw a store, completely destroyed. Goods fell to the ground. People ran away. I lost my glasses and my hat," Motti told Israel Army Radio.
A wounded man is evacuated
after the blast in Carmel Market
Eli Malka, 38, who has a pickles stand several hundred metres away on the same alley said: "There were men and women shouting, in a state of hysteria. I was afraid there would be another bomber so I walked away immediately."
The largest of the Palestinian resistance groups, Hamas, blamed the attack on ongoing Israeli "crimes".
"The problem lies with the occupation and the resistance represents a case of self-defence"
Sami Abu Zuhri
"This operation comes as a continuation of the resistance to occupation and as a reply to the continuing Zionist crimes against our Palestinian people, said spokesman Sami Abu Zuhri.
Those crimes include assassinating leaders of the Palestinian resistance and "continued Israel incursions like the ones we have seen in northern Gaza, Khan Yunus, Rafah, Nablus and Jenin," said Zuhri.
"After the Israeli aggression in northern Gaza and Khan Yunus, Jenin is now facing repeated incursions. Therefore, the problem lies with the occupation and the resistance represents a case of self-defence," he added.