A bomb was planted in a minibus carrying labourers working for US-led forces in a Kandahar base, Aljazeera correspondent Wali Allah Shahin said from Kabul on Thursday.
A policeman at the scene, Raaz Mohammad, said the rush-hour explosion was big. "We have seen more than 10 dead people with legs and hands blown off being brought out of the bus," he said.
Among the workers were Afghan translators who accompany US troops on their missions in south Afghanistan.
Shahin said Canadian troops and Afghan police had surrounded the area.
The explosion came after a big US-led military operation in the southern and eastern provinces to root out Taliban fighters, he added.
Thursday's blast was the latest incident in a wave of the worst violence in Afghanistan since the Taliban were ousted in 2001.
More than 900 people have been killed in violence in Afghanistan this year.