The blast took place at a garbage dump near Irrigation colony.
"There is nothing to worry and we are yet to ascertain what was the cause of the explosion," a home department official told IANS.
Police officials, accompanied by dog and bomb-disposal squads, have rushed to the spot, the official said.
A district official said: "It is too early to say anything but thankfully no one has been injured and we are looking into all possible angles behind the explosion."
Investigators feel that the blast could have been triggered by some chemical or any other thing which blew off due to the extremely hot temperature.
In the past, Varanasi witnessed bomb blasts by terrorists.
Varanasi is the parliamentary constituency of Prime Minister Narendra Modi.