Sistan-Baluchistan province, where the bombing hit, has long been a flashpoint, with a number of attacks reported in recent past.
The report went on to say that shooting could also be heard in the city. Details were sketchy as the situation was still developing.
State authorities did not identify who was behind the attack. No militant group immediately claimed responsibility for the attack.
Chabahar, near Iran’s border with Pakistan on the Arabian Sea, is home to a new port recently built and is an economic free zone for the country.