The blast in the early hours of Thursday, occurred minutes after midnight in a residential neighbourhood in the district of Pendik, on Istanbul's Asian side, a local police official said.
"We do not know what caused the explosion," he said on condition of anonymity. "It might have been the result of a traffic accident, but nothing is certain yet."
There were conflicting reports about how the blast happened.
The CNN-Turk news channel reported it had occurred in a vehicle, while a witness told Star television that it exploded in a roadside rubbish bin and said it was a bomb.
CNN-Turk put the number of injured at five and said that the two victims killed were travelling in a car.
"We do not know what caused the explosion. It might have been the result of a traffic accident, but nothing is certain yet"
Television footage showed the police cordoning off the area, where several cars with broken windows were also seen.
The windows of nearby buildings were also broken, NTV television said, adding that ambulances and firefighters rushed to the scene.
Turkey has suffered a series of bomb blasts in recent months, mostly blamed on Kurdish separatists.
Islamic fighters and far-left radicals have also been behind bomb attacks in Turkey in the past, including in Istanbul.
Five people were killed last month when a bomb struck a minibus in the popular Aegean resort of Kusadasi. Kurdish separatists claimed responsibility for that attack.
Two explosions ripped through rubbish bins on Tuesday in the southern resort city of Antalya, injuring six people. A government minister said a gas leak was behind those blasts.