The blast occurred near the imambargah in Abbas Town area of Pakistan's largest city.
The explosion, which was heard from several kilometres away, damaged several nearby buildings, witnesses said.
Three persons were killed instantly, witnesses told the media. The injured were taken to nearby hospitals, where an emergency was declared.
A 'majlis' or religious gathering had been organised at the imambargah at the time of the blast.
Witnesses said the bomb was hidden in a motorcycle that was parked near the imambargah earlier in the day.
The witnesses said the blast was followed by intense firing in the area.
The blast also snapped the power supply, plunging the area into darkness and affecting rescue operations.
No group claimed responsibility for the attack.
The explosion occurred despite extensive security arrangements put in place for the Islamic month of Muharram, which has often been marked by attacks on the Shia minority in the past.
Soon after the blast angry protesters took to the streets and started pelting stones on passing vehicles.
Karachi: At least three persons were killed and 16 more injured when a bomb went off outside a Shia imambargah (prayer hall) in the southern Pakistani port city of Karachi on Sunday, police and witnesses said.
First Published: Sunday, November 18, 2012, 23:32