Television footage showed a bus and the surrounding area ablaze with smoke billowing into the sky as firemen tried to fight the fire. Ambulances ferried casualties to hospital while anxious residents looked on.
The explosion was caused by a remote-controlled car bomb, Turkey's Dogan news agency quoted Gaziantep's governor Erdal Ata as saying.
"Kurdish militants are believed to be behind the attack," a security source told Reuters.
There was no immediate claim of responsibility but southeastern Turkey has seen frequent attacks by the Kurdistan Workers Party (PKK), designated a terrorist group by Turkey, the United States and European Union. The group launched a separatist insurgency in the region 28 years ago.
The violence is a headache for Turkey's Prime Minister Tayyip Erdogan as he seeks to limit the impact on Turkey of the conflict in Syria, where the PKK is exerting growing authority in some border areas. Ankara believes PKK militants are receiving arms from Syrian forces.
Turkey has opened a centre in Gaziantep to receive international aid for Syrian refugees fleeing the uprising there against President Bashar al-Assad, and is struggling to cope with an influx of almost 70,000 Syrian refugees.
Suspected PKK members ambushed a Turkish military bus in western Turkey earlier this month, an attack outside the group's regular field of operation in the mainly Kurdish southeast.
Two Turkish soldiers were killed earlier on Monday by a landmine on a road in southeast Turkey, an attack also believed to have been carried out by PKK militants, security sources said.
