Police Major Riky Naldo, the deputy chief of police in nearby Poso, told El Shinta radiot that two bombs exploded on Saturday morning at Tentena Market in the Christian-dominated town.
Earlier reports initially indicated that some 15 people had died while 20 more had been wounded, but the toll increased as the emergency services searched through the wreckage.
Tentena, on the island of Sulawesi, is part of a region where clashes between Muslims and Christians broke out in the late 1990s and raged for several years, killing approximately 2000 people.
One caller to El Shinta said the market was crowded at the time of the blast.
There have been sporadic bouts of violence in the region in the past six months. Much of the Sulawesi violence has focused on Poso, which is about 1500 kilometres northeast of Jakarta.
The conflict at the time also attracted Islamist fighters, some who are alledged to have links with the al-Qaida network.
Tentena lies to the south of Poso. Some 85% of Indonesia's 220 million people are Muslim. In some eastern parts, such as the Poso area, Christian and Muslim populations are about equal in numbers.