A spokeswoman for the Basque Country said that a police rescue team was searching for people trapped in the wrecks of the Civil Guard barracks in the town of Legutiano, where the bomb exploded around 0100GMT on Wednesday.
The police said that 40 people including the family of the civil guards who lived in the barracks, were evacuated after the blast and the area was cordoned off.
Meanwhile, police also found the car that the assailants used to flee in the nearby town of Abadino.
The Spanish media has attributed the blast to the armed separatist group from Basque, Euskadi ta Askatasuna (ETA), also known as the Basque Homeland and Freedom movement in Basque.
Spanish police said that no group had claimed the responsibility of the blast and that there was no warning before the attack.
ETA has been blamed for over 820 deaths during its four-decade-old fight for a separate Basque nation, taking in parts of northwestern Spain and southwestern France.
It had announced a "permanent ceasefire" in March 2006 but called it off in June 2007, saying it was frustrated with a lack of concessions by the socialist government during the peace talks.