Al-Husain area – considered the heart of Islamic Cairo – was rocked by an explosive thrown at a crowd of tourists at the old bazaar.
The blast killed at least two and wounded several others.
General Fuad Allam, former head of Egyptian State Security, said terrorist attacks had been constrained and limited in Egypt and everyone was caught by surprise.
"Possibilities for the occurrence of such an accident were far from possible," he said. He believes a minor terrorist cell gone astray may have been behind the attack.
"It is obvious that it is not very well organised. Most probably it will be a locally made bomb."
Nails and gunpowder
Egyptian media reported a bomb was hurled from a motorcycle, but police on the scene believe one of the dead may have been the bomber himself.
Nails were used in the bomb to
create maximum bloodshed
"All indications are that this was a very basic bomb," an Egyptian security said on the condition of anonymity.
"It included nails and other sharp objects designed to create maximum bloodshed when the gunpowder goes off."
Usama Saraya, editor-in-chief of al-Ahram al-Arabi news magazine, doubted a new wave of violence was about to hit Egypt.
"The way this was done shows it is individualistic and not organisational," he said.
Egypt is only the latest Arab country to be hit by violence. Earlier this week, Saudi security forces killed several members of what they called a local al-Qaida cell in the Kingdom.
Lebanon, on the verge of a general election and the imminent withdrawal of Syrian troops, has been hit by four deadly bomb attacks in three weeks.
A theatre popular with Western
expatriates in Doha was targeted
And on 20 March, Qatar's capital Doha was rattled by a car bomb blast which killed a British national, the bomber, and injured several others. A relatively unknown group claimed responsibility for the Doha blast.
The wave of violence in the region is a cause of instability and should be a cause for concern, Diaa Rashwan, an expert in Islamic groups and a researcher at al-Ahram Centre for Strategic Studies said.
He said the attack at al-Husain was just the latest of a general spectre of violence in the region.
"This accident doesn't stand alone by itself. Since the Iraq war the entire Arab region has been suffering instability. Violence has reached some seven [Arab] countries so far," he said.
Effects on political reform
The attack comes at a particularly tense time in the Egyptian political scene. As general elections draw near, Cairo, Alexandria and other major cities are witnessing an unprecedented wave of demonstrations and protests critical of the government.
Egypt has been witnessing a flurry
of pro-reform demonstrations
On a nearly weekly basis, opposition figures hold Kifaya (Enough) rallies to protest stalled political reforms and in late March, several thousand members of the banned Muslim Brotherhood demonstrated in central Cairo, calling for constitutional reforms and for lifting of restrictive emergency laws.
However, there are concerns that the Egyptian government may use the latest attack to clamp down on such protests.
"I don't think this will affect the coming elections in September but if the Egyptian government uses this as a cause to prevent demonstrations and force emergency laws and immobilise presidential candidates, this might lead to predictions that the explosion will hinder the democratic reform process," said Hasan Nafaa, head of the political studies department at Cairo University.
Effects on tourism
Although Egyptian officials have been quick to downplay the attack and label it a likely individualistic act, there are fears that the country's greatest cash cow - tourism - will suffer.
An attack on the popular southern archaeological destination of Luxor in November 1997 left 71 people dead.
Egypt's historical sites attract
millions of tourists every year
The particularly gruesome nature of that attack – many tourists were attacked by swords and hacked to death – left Egypt's tourism industry paralysed.
International bookings to the country were cancelled and it would take more than four years for the tourism industry to recover.
Several bomb attacks on the popular resort town of Taba in the Sinai Peninsula killed 34 Egyptians and Israelis in October 2004, but its effect on the industry was minimal.
However, an attack in Cairo may be perceived differently.
"The attack will hold long-term implications affecting the economic, political and security situation in Egypt," Rashwan said.
Saraya agrees: "Such events for sure are going to affect tourism in Egypt especially after the Taba explosions. We need to know what exactly happened there and who is behind this."