The suburb is a stronghold of the Shia militant group Hezbollah.
Hezbollah’s al-Manar TV station said the blast destroyed part of a facade of a building in a densely populated area of Haret Hreik district.
The city has been recently been hit by attacks linked to heightened Sunni-Shia tensions over the Syrian war.
Former minister Mohamad Chatah, a Sunni and a critic of Hezbollah, was killed by a car bomb last Friday. Six other people died and at least 50 were injured.
Former Prime Minister Saad Hariri, to whom Mr Chatah was an adviser, blamed Hezbollah for that attack but it has denied any involvement.
No-one has yet said they carried out the attack, but it came a day after Majid alMajid, the head of a Sunni jihadist group which claimed a suicide bomb attack on the Iranian embassy in Beirut in November, was reportedly arrested.
Al-Manar TV showed large crowds gathered around twisted and burnt-out vehicles in front of a building that had been badly damaged in Thursday’s blast.
Initial reports say the bomb was detonated in a four-wheel-drive vehicle.
The street is home to shops, restaurants and residential buildings. The TV said the explosion took place a few hundred metres from the nearest Hezbollah political offices.
“Suddenly, the whole area went bright and we started running away,” Ali Oleik, an accountant working in a nearby building, told the Associated Press news agency.
BBC Arab affairs editor Sebastian Usher says the bomb is not one of the biggest of the recent incidents, but its impact was considerable because it was detonated during rush hour.
That attack, in the same part of the city as Thursday’s bomb, left 23 people dead.
Majid al-Majid, the Saudi “emir” of the al-Qaeda-linked Abdullah Azzam Brigades, had said that attacks would continue in Lebanon until Iranian and Hezbollah forces stopped fighting alongside government forces in Syria.
Hezbollah has sent fighters to help Syrian President Assad in the war against Sunni-led rebels. President Assad comes from the Alawite sect, an offshoot of Shia Islam.
Earlier in December, a senior Hezbollah commander with close links to Iran, Hassan Lakkis, was shot dead outside his home near Beirut.