Two vehicles, without licence plates, broke through roadside fences and crashed into an open air market at Park North Street near Renmin Park at 7.50 a.m. and explosive devices were set off, said a statement issued by the Xinjiang Uygur Autonomous Region's publicity department.
The incident occurred when the morning markets selling fresh groceries were crowded with people, Xinhua reported.
The authorities have said that explosives were thrown at people before the vehicle exploded.
Xinjiang, home to the Muslim Uighur minority, has seen a number of attacks since last year.
Last month a bomb attack at a railway station in Urumqi killed three people and injured 80.