A further 35 people were injured, many in a stampede caused as worshippers tried to flee after the blast in Imphal, the capital of Manipur state.
"The temple was packed with Hindu devotees when unknown militants lobbed a grenade," an army spokesman, Colonel Shantunu Devgoswamy, said.
Devgoswamy said the blast occurred in a temple belonging to the International Society for Krishna Consciousness (ISKON), also known as the Hare Krishna.
The victims were attending festivities marking Krishna's birthday.
"One unidentified woman and her son were among those killed," said Bobby Singh, a surgeon from a state-run hospital
"There were six foreigners injured and we have so far identified three of them as US citizens."
The attack occurred despite tight police and paramilitary security in and around the temple where hundreds of Hindus congregated for the festival.
None of Manipur's 19 known militant groups, which seek greater autonomy or a separate state, has so far claimed responsibility for the attack.