There was no word on further casualties.
The injured included 11 French and three German tourists, said a security official who did not have an exact breakdown of the wounded.
The blast took place in the famed Khan el-Khalili market in medieval Cairo, frequented by tourists and locals alike. Blood could be seen, on the marble paving stones in front of the historic Hussein mosque.
A police colonel at the scene said the small bomb went off outside a cafe near the mosque kicking up stone and marble fragments, which wounded the passersby. Officials spoke on condition of anonymity because they were not authorized to speak to the press.
Riot police cordoned off the area and sniffer dogs could be seen as worshippers were being evacuated. Fire engines were also on the scene.
"I was praying and there was a big boom and people started panicking and rushing out of the mosque, then police came and sealed the main door, evacuating us out of the back," said Mohammed Abdel Azim, 56, who was inside Hussein mosque.
"We thought that Egypt was the only country safe from bombings," he added.
The Khan el-Khalili, which sells tourist souvenirs, gold and silver jewelry and traditional handicrafts is always filled with tourists. It was last attacked in April 2005, when a suicide bomber detonated a homemade bomb and killed two French citizens and an American.
Egypt fought a long war with Islamist militants in the 1990s, which culminated in a massacre of more than 50 tourists in Luxor in 1997. The rebels were largely defeated and there have been few attacks since in the Nile valley.
There were, however, a number of attacks in recent years against resorts in the Sinai Peninsula, including one in Sharm el-Sheik in 2005 that killed more than 60 people.
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