The LTTE, or Tamil Tigers, have been fighting the Sri Lankan government for two decades in an attempt to secure a homeland for ethnic minority Tamils in the north and east of the island.
The explosion shattered the windows of the bus and peppered it with shrapnel. A 45-year old man who identified himself only as Nalaka said he was thrown from his motorcycle by the explosion.
"When I got up I saw the bus and quickly got into it. Some people lay dead. Some others were bleeding, he told Associated Press Television News.
"I heard somebody screaming 'help, help,' and I rushed to him, but I could not move him because he was heavy."
The incident on Friday is the latest in a series of attacks against commuters in and around Colombo.
At least 18 people were wounded when a bomb exploded as a packed commuter train passed between Colombo's Wellawatte and Dehiwela areas on Wednesday.
And on May 26, another attack on a commuter train blamed on the Tamil Tigers killed nine people and wounded 84 others.
"What is noticeable is that the targeting of civilians seems to have been stepped up," Minelle Fernandez, reporting from Colombo for Al Jazeera, said.
"The military and the government says this is a sign of the increasing desperation of the LTTE as they take hits on the northern battlefront, they want to move the attention of the government and the resources of the military to the south."
The latest violence against civilians comes as the Sri Lankan military is pressing an offensive to retake northern areas controlled by the Tigers.
Analysts say the government has been gaining ground recently in the decades-long conflict but see no clear winner on the horizon.