A number of Iranian media have reported a vehicle explosion in the largest port city in Sistan-and-Balochistan province, Chabahar.
Television also reported shooting in the area, located in the region of Sistan-Baluchestan, which is home to a Sunni Muslim minority in the largely Shi'ite country and has always been plagued by violence from both drug smugglers and separatists.
The state news agency IRNA said some 24 people had been wounded.
At least two police officers lost their lives and some 40 other people sustained injuries in the explosion, which also killed the bomber.
There was no immediate claim of responsiblity for the attack.
It hosts the operation of a joint port project between Iran and India.
That operation followed a 2009 terror attack by extremist terrorists that claimed over 40 lives in Sistan-and-Baluchestan Province. Mark my words: "Iran WILL bring terrorists & their masters to justice" Zarif added in the tweet.
Iran has stepped up security in border areas after gunmen in September opened fire on a military parade in Iran's southwestern city of Ahvaz, killing 25 people, nearly half of them members of Iran's elite Revolutionary Guards corps.
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Iranian forces, from time to time, bust terrorist ringlets in the province, foiling their planned attacks and confiscating weapons and ammunition in the course of such security operations.
Chabahar lies some 100 kilometres (60 miles) west of the Pakistan border and is home to a large Balochi community which straddles the two countries.
Chabahar Port, which is being developed with funding from India, has been described as India's "golden gateway" that will help boost trade links to land-locked Afghanistan and central Asia, while bypassing its regional rival, Pakistan. Later reports dismissed that the police chief of Chabahar was among the casualties.
The attack comes as Iran's economy reels in the wake of the United States re-imposing sanctions lifted by Tehran's nuclear deal with world powers.
Mohammad Hadi Marashi, deputy governor for security affairs, told state TV that two police officers were killed in the attack.
Arab separatists and the Islamic State group both claimed responsibility for the attack.
"The terrorist grouplets are mainly linked to foreign security services like those belonging to Saudi Arabia, and have constantly been seeking to destabilize our border regions", said the IRGC official. "There can be no justification for any act of terror", the MEA said.
Suicide attacks are rare in Iran.