The Magen David Adom paramedic service said the blast took place on Sunday and two men were injured and a third received serious wounds, the Jerusalem Post reported.
There was no immediate claim of responsibility for the explosion.
The blast occurred just a day after four Israeli police officers were injured after being struck by a car in East Jerusalem (al-Quds).
The incidents come amid tensions following the killing of a Palestinian teenager at a checkpoint set up by the Israeli military in the area. Several Palestinians were wounded during the clashes that erupted in East al-Quds.
According to reports, Israeli forces shot dead the 16-year-old Palestinian boy on Friday night, while he was walking toward the al-Zaim checkpoint with his family, claiming that he intended to stab an Israeli officer.
Also on Saturday, Israeli forces shot and killed a Palestinian man in the southern West Bank city of al-Khalil, making a similar claim that he had stabbed a border policeman.
Israeli forces were reportedly preventing Palestinians from entering the area of the Ibrahimi Mosque, known as the Cave of the Patriarchs, in al-Khalil at the time the incident took place.