The Taliban has so far not claimed responsibility, but the attack bore their hallmarks as the fighters rely heavily on roadside bombings as part of their campaign against the Afghan government and international troops.
The attack in Kandahar, the biggest city in the southern region, comes three days after a suicide bombing killed four people and wounded more than 20 others.
Meanwhile, Hamid Karzai, the Afghan president, has ordered an investigation into an incident in which Afghan police forces killed seven civilians, mistaking them for anti-government fighters in Kandahar's Spin Boldak district, according to a statement from the presidential palace.
The seven civilians, who were collecting firewood on a mountain near the Pakistani border, were shot dead on Friday morning.
Six police, including their unit commander, have been detained.