Witnesses reported seeing bodies of the dead and wounded strewn about the smoking rubble of a billiards hall where bomb squad officers said the device had been placed.
Teng Tacao, a provincial head of police, said two people were killed instantly; the military reported that another died later. 33 others were in serious condition with shrapnel and burn wounds.
Police foiled a previous bomb attack in the city only last month when they found a device made from 81mm mortar rounds, a trademark of Muslim fighters operating in the southern Philippines who have been linked to al-Qaeda.
Rebel fighters from the separatist Moro Islamic Liberation Front (MILF) are known to operate near Tacurong and other parts of Mindanao island, but the group's spokesman denied it had a hand in the attack.
"That is not our style," Eid Kabalu said. "It may be some groups out to sow terror ahead of the elections."
National mid-term elections will be held on May 14, and the run-up to the vote has been marred by assassinations and other violence.
Last Wednesday police said that 20 people had been killed in election-related violence.