Durdu Kavak, Diyarbakir's chief prosecutor, said: "Four people have been taken into custody as part of efforts to identify and catch the perpetrators. Several lines of investigation are being pursued."
Police sources said one suspect was a former owner of the car used in the blast and that the police were looking for the person who recently bought the vehicle.
Four of those killed on Thursday were high school students attending classes at a nearby private school. The wounded included about 30 soldiers.
The PKK, which has waged a 23-year campaign for Kurdish self-rule in southeast Turkey, had recently threatened to retaliate against Turkish air strikes on its bases in neighbouring northern Iraq last month.
Meanwhile, police in Van, to the northeast of Diyarbakir, seized 55 kilogrammes of explosives and hand grenades in a van they had chased and which was found abandoned outside the city early on Friday, local officials said.
The pursuit was launched following a tip-off that bomb attacks similar to the one in Diyarbakir were being plotted in Van.
Nine kilogrammes of explosives and remote-control detonators, believed to belong to the PKK, were seized in a car in the northwestern province of Bursa on Thursday evening, Sehabettin Harput, the local governor said.
Harput said that the driver had also been detained.
In Ankara, Recep Tayyip Erdogan, Turkey's prime minister, said more suspects could be detained for the Diyarbakir blast and accused the PKK of mounting the attack.
Erdogan said: "The terrorist organisation has and never will represent our Kurdish citizens... We will continue to fight them with determination and without concessions. This is an attack against our unity and solidarity."
Yasar Buyukanit, the head of Turkey's army, said that the blast reflected "panic" in PKK ranks following Turkey's air raids on the group's camps in the mountains of northern Iraq, which the fighters use as a springboard for cross-border attacks inside Turkey.
"They are in panic over the losses they suffered in northern Iraq. But this will not change the end they will face," Buyukanit said during a visit to Diyarbakir.
The Turkish military has so far confirmed three air strikes against PKK targets in northern Iraq since December 16, which are being conducted with assitance from US intelligence.
It has said at least 150 PKK fighters have been killed and more than 200 of their positions destroyed.
Mehdi Eker, Turkey's agriculture minister and himself a Kurd from Diyarbakir, said that Thursday's blast would not weaken the government's determination to improve the rights of the country's Kurds.
"We will fight terrorism on one hand and carry out reforms on the other hand to make Turkey more democratic," he said.
In a separate development, two assailants hurled a bomb into a shop in the eastern Turkish city of Malatya on Friday, injuring two people inside.
Police are studying footage from the shop's security camera and have launched a manhunt for the attackers, one of whom was a woman, who threw the percussion bomb.
It was not immediately clear who was behind the blast.