Kashmir police officials said Deputy Inspector-General Ravindra Kotwal's motorcade was passing by when suspected separatist fighters set off an improvised explosive device they had placed in a parked scooter.
The incident took place at 5.10pm (1110 GMT) on Saturday in Anantnag's Nai Basti area. Anantnag is about 55km south of Srinagar, the summer capital of Kashmir.
Kotwal was removed to a hospital where doctors said he was out of danger.
Five policemen, including the Kotwal's personal security guards and a radio operator, suffered serious injuries and were moved to a hospital in Srinagar for specialised treatment.
Kashmir police are frequently
targeted by separatist groups
"The condition of at least four of them, including the radio operator, is very serious," an official said.
Some of the bystanders injured in the blast have also sustained grave injuries, police and hospital sources said.
There are conflicting reports about the exact number of civilian casualties. Some put it at six but others question that figure.
No claims yet
None of the more than a dozen armed groups fighting Indian rule over the divided Himalayan state has so far admitted carrying out the blast, which Kashmir police officials said clearly was intended to kill the police officer and his retinue.
Separately, police said they have found the corpse of Muhammad Afzal Rather near a rice-husking machine, not far from the victim's house in Magam village in the central Kashmir district of Budgam. Unidentified assailants had hanged him.
As per official statistics, more than 43,000 people have died in the 16-year-old rebellion in Indian-administered Kashmir. Local political and human rights groups, however, place the toll at anywhere between 80,000 and 100,000.