The blast came late on Friday, hours after US Secretary of State Condoleezza Rice left Beirut after a surprise visit in support of Lebanon's new government.
Aljazeera said the explosion was caused by an explosive device placed under a car owned by a resident who lived in a nearby building.
The owner of the vehicle, Joseph Nadin, was among the 12 people wounded in the explosion.
"I was eating with my friends at a restaurant, when I heard a huge explosion. The windows broke, the restaurant shook. We all crowded to get out and then we learned it was a bomb after we saw the smoke," Tony Hana, 30, said.
Prime Minister Fuad Siniora condemned the bombing as he visited the site near Rue Monot, an area known for its nightlife, saying it was "aimed at destabilising Lebanon and shaking the confidence in the new government".
The motive or the target of the attack was not immediately known and no one has claimed responsibility.
Lebanon has seen a string of assassinations, mostly by car bombs, targeting politicians and others in the past months - most notably the 14 February slaying of former prime minister Rafiq al-Hariri in a blast that killed 19 others on a Beirut street.
Rice came unannounced to greet
new government leaders
His death fuelled massive protests against Syria, which many blamed for the bombing.
Rice, on a Middle East tour, made a previously unannounced visit to Beirut to meet leaders of the new government and express her support.
The United States had pressed hard for an end to Syria's presence in Lebanon.