The bomb had been left in a bag by the side of the road near the central bus station, police said.
Dozens of ambulances converged on the scene near the entrance to the city, and police sealed off the area.
Witnesses said the force of the blast - just after 1500 local time (1300 GMT) - shook buildings over a wide area.
A correspondent for AFP news agency at the scene said people were lying on the ground covered in blood and many cars and buses had shattered windows.
"(We believe) the device weighed about 1-2kg (2-4lb)," Internal Security Minister Yitzhak Aharonovitch told Israel's Channel 2 television.
"It exploded in a small suitcase on the sidewalk next to the bus stop."
Israeli police spokesman Mickey Rosenfeld told the BBC they were searching for a suspect and a vehicle believed to have been used in planting the bomb.
Hospital officials told Israeli television that four of the injured were in a serious condition, and another two were moderately hurt.
Jerusalem was hit by a spate of bombings during the second Palestinian uprising tha
Dozens of ambulances converged on the scene near the entrance to the city, and police sealed off the area.
Witnesses said the force of the blast - just after 1500 local time (1300 GMT) - shook buildings over a wide area.
A correspondent for AFP news agency at the scene said people were lying on the ground covered in blood and many cars and buses had shattered windows.
"(We believe) the device weighed about 1-2kg (2-4lb)," Internal Security Minister Yitzhak Aharonovitch told Israel's Channel 2 television.
"It exploded in a small suitcase on the sidewalk next to the bus stop."
Israeli police spokesman Mickey Rosenfeld told the BBC they were searching for a suspect and a vehicle believed to have been used in planting the bomb.
Hospital officials told Israeli television that four of the injured were in a serious condition, and another two were moderately hurt.
Jerusalem was hit by a spate of bombings during the second Palestinian uprising tha
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