"I heard the blast when the prayer ended. I saw people rushing out," one witness said.
Men in blood-soaked long white shirts were seen rushing through the crowds and getting into an ambulance. Another person was seen being carried to the ambulance.
Local television showed hundreds of men and boys rushing out of the mosque.
"This is an intentional sabotage of the peace and tranquillity of the state," Y.S. Rajasekhara Reddy, Andhra Pradesh state's chief minister, said.
He added, however, that it was too early to speculate on what may have been behind the attack.
Some people threw stones at shops and vehicles after the explosion and police used water cannons to disperse angry crowds who were trying to enter the sealed-off area in the heart of the city.
"Police fired rubber bullets and used teargas and truncheons to restore law and order, which left 32 injured," R.V. Chandravasan, Hyderabad's civilian administrator, said.
Hyderabad has a large Muslim population and several historic mosques.