Syrian Interior Minister Bassam Abdul-Majid called the bombing a "terrorist act" and said all of the victims were civilians. He declined to say who was behind the blast.
"We cannot accuse any party. There are ongoing investigations that will lead us to those who carried it out," Abdul-Majid told state TV.
The 8:45 a.m. explosion occurred in a southern neighborhood of the capital near the junction to the city's international airport, at an intersection leading to Saydah Zeinab, a holy shrine for Shiite Muslims that is frequently visited by Iranian and Iraqi pilgrims about five miles away.
Such bombings are rare in Syria, a tightly controlled country where the regime of President Bashar Assad uses heavy-handed tactics to crack down against dissent and instability.
But over the last year, the country has witnessed two major assassinations. Several explosions blamed on Sunni Muslim militants opposed to Syria's secular government have also taken place over the last few years.
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Saturday's bombing was by far the largest and tested weaknesses of the government's traditionally tight security grip.
Al-Manar, a satellite TV station allied with Lebanon's Shiite militant group Hezbollah, reported that witnesses said more than 14 people were injured including children.
An intelligence building is located in the area, but cars are not normally allowed to park nearby and it was not clear how close the bombing was to the building.
The last major explosion to strike Damascus was in February when a car bomb killed Imad Mughniyeh, one of the world's most wanted and elusive terrorists. The former Hezbollah security chief was suspected of masterminding attacks that killed hundreds of Americans in Lebanon and brutal kidnappings of Westerners.
Hezbollah and its top ally, Iran, blamed Israel for the assassination, but Israel denied any involvement.