Video on state television showed mangled bodies near Sabaa Bahrat Square, blood and debris in the streets and damage to cars and buildings, CNN reported.
State television reported the explosion was near a school and state buildings, including the Central Bank of Syria.
No one claimed responsibility for the bombing but state-run SANA blamed it on "terrorists," a term the government uses for opponents who have been trying to oust President Bashar Assad for more than two years.
SANA reported that "terrorists blew up a booby-trapped car" in the crowded area.
Syria's civil war began as peaceful protests against the Assad government in March 2011. The United Nations estimates that more than 70,000 people have died in the conflict.
Israeli officials say they fear jihadis will use the Golan Heights to attack Israel now that Syria has withdrawn thousands of troops from the area, Israel's military chief said.
Syrian rebels increasingly occupy parts of the Golan Heights that had been patrolled by Syrian troops because the troops were removed by Assad's regime so they could fight in battlefronts closer to Damascus, Britain's Guardian newspaper reported Sunday.
Regime military officials "have moved some of their best battalions away from the Golan," a Western diplomat told the newspaper.
Some of the units were replaced by "poorer-quality battalions," the diplomat said. The moves "are very significant" because rebel groups have moved in to fill the vacuum, the diplomat said.
The rebels include Islamic extremists, including al-Qaida members, who seek to establish a new foothold in Syria.
"We are seeing terror organizations gaining footholds increasingly in the territory," Lt. Gen. Benny Gantz, Israel's military chief, told the newspaper. "For now, they are fighting Assad. Guess what? We're next in line."
The Golan Heights' eastern border was, until recently, thought to be occupied by four Syrian army divisions and it was believed they helped make the Golan the safest of Israel's borders for more than four decades, The Guardian said.
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