"The explosion occurred in a place where car and people traffic is intense. It looks like the intension was to inflict as much harm to people as possible," Interior Minister Idris Naim Sahin said.
The parked car was purchased a week ago but it was not yet registered. Police detained a woman at the scene who shouted "long live our struggle!" as she was escorted away by police, Dogan news agency video showed.
Kurdish rebels fighting for autonomy in southeastern Turkey have recently escalated their attacks on Turkish targets. Islamist and leftist militants have also carried out some bombings in this NATO member and U.S. ally.
Kurdish rebels were blamed for a small bomb attack in the Mediterranean resort town of Kemer that wounded 10 people, including four Swedes on Aug. 28. Turkish warplanes bombed suspected rebel hideouts in northern Iraq last month in response to the escalation of attacks by the guerrillas.
The bodies of three people were found in a building near the car that exploded in downtown Ankara, Sahin said.
Deputy Prime Minister Bulent Arinc said police had information that a bomb was planted on the car.The explosion sparked a series of blasts in adjacent vehicles.
Reyhan Altintas, a neighborhood administrator, said she rushed outside after hearing a loud blast. It was followed by three other blasts, apparently caused by cars catching fire.
"I had never heard anything like it in my life," witness Adnan Yavuz said of the initial blast. "Then came another explosion and parts of a car dropped from the tree."
The wounded were initially treated in the school yard before medics rushed to the scene and whisked them away to hospitals, NTV television said. Authorities evacuated the school as worried parents rushed to pick up their children.
Associated Press Writers Suzan Fraser and Burhan Ozbilici in Ankara contributed to this report.