The blast in the early hours of Saturday blew off the front of the first and second floors of a building in a suburb on the northern edge of the Lebanese capital.
The explosion shortly after midnight in the commercial area of the New Jadida neighbourhood sent debris flying yards away and shattered windows within a few blocks, damaging cars and shops in the area.
Local legislator Pierre al-Gumayil called it an act of terror that could be an attempt to destabilise the country.
"This has been the message to the Lebanese people for a while - to sow fear and terror among Lebanese citizens," al-Gumayil told Aljazeera.
The message is "if there is a Syrian withdrawal from Lebanon, look what Lebanon will face," said al-Gumayil, a member of the Christian opposition bloc in parliament and the son of former President Amin al-Gumayil.
"We don't know what and why," said a white-haired man who was asleep on the second floor when the bomb went off.
"No one important lives here. We're all regular."
It was not clear what the target might have been.
"This has been the message to the Lebanese people for a while - to sow fear and terror among Lebanese citizens"
Pierre al-Gumayil, legislator
Some witnesses said the car attempted to stop in front of a bingo saloon, but security guards asked its driver to move along. The driver then parked the car a short way down the road.
Other witnesses said the car belonged to a local resident.
"The ... car belonged to an Armenian living in the building in front of which the explosion took place. The explosive was placed under his vehicle," a police spokesman said.
"An inquiry has been opened by the police who went immediately to the scene," he added.
The wounded have been taken to a nearby hospital.
The bomb blast came as tensions
are high over Syria's influence
But the car bomb left a huge crater in the road and cars parked nearby were mostly wrecked.
The force of the explosion threw the car bomb 20m across the street, reducing it to a contorted bundle of metal.
"I was standing under this building and we heard a huge explosion and there was a big cloud of dust, and glass flew everywhere. We saw this car just fly into the air and land on the street right in front of us," said witness Rani Ayub.
Abbas Nasir, Aljazeera's correspondent in Beirut, said some top Lebanese security officials told Aljazeera the bomb was placed between a wall in the parking garage of the targeted building and a resident's car.
Political figures think the explosion is nothing but a "sabotage action" to disturb the stability in Lebanon, said the correspondent.
The explosion site has no specific significance, but an employee at the American embassy lives in the building, the correspondent said.
Nasir said the explosion represents a new opportunity for the Lebanese opposition to resume criticism of pro-Syrian government figures.
In another incident which the police say is not related to the car bomb blast, a hand grenade was thrown from a speeding car at two Syrian workers.
Syrian soldiers have been slowly
withdrawing from Lebanon
The grenade, however, did not explode, Aljazeera learned.
Lebanon has been rocked by political turmoil since 14 February when former prime minister Rafiq al-Hariri was killed in a bomb blast.
Tempers have been running high since, with the Lebanese opposition holding Syria responsible for al-Hariri's assassination.
Damascus has steadfastly denied the charge.
Amid rising resentment against Damascus, 10 Syrian migrant workers have been killed in Lebanon since al-Hariri's assassination.
Under immense international pressure and Lebanese consternation over his killing, Syria has begun to withdraw its troops from Lebanon.
Damascus had 14,000 troops in Lebanon.