A security officer was killed when a suicide bomber detonated a car bomb near a Lebanese army checkpoint in the capital, Beirut.
The blast, which caused a huge fire, occurred in a southern suburb mainly inhabited by Shia Muslims.
At least 12 people who were watching World Cup football in a nearby cafe were wounded.
Lebanon has suffered a rise in sectarian tension linked to the conflict in neighbouring Syria.
Last week a policeman was killed and 30 people injured when a suicide bomber detonated a car full of explosives in eastern Lebanon.
The latest explosion occurred just after midnight local time (21:00 GMT).
Reports suggest the General Security Agency officer who died had become suspicious of the bomber and was killed after stopping his vehicle.
“We were watching the football game and the explosion happened,” eyewitness Zahi Assaf told Reuters news agency.
“We did not know what was happening… then people started running.”
Fellow Beirut resident Marwan Shammas said he rushed to the area and “saw people running and screaming, people traumatised”.
Previous attacks on Shia areas in Lebanon have been carried out by Sunni radicals who accuse Shia militant group Hezbollah of fighting alongside President Bashar al-Assad’s troops in Syria.
But the incident comes amid mounting regional tensions over events in nearby Iraq, where the Islamic State of Iraq and the Levant (Isis) has seized large chunks of territory in the country’s north and west.
Last week, Lebanese security forces raided a hotel in Beirut and arrested more than a dozen men thought to have been plotting attacks in the country.
Correspondents say security forces have been on high alert since last week’s suicide attack in eastern Lebanon.
It was believed to have been an attempt to assassinate security chief Major General Abbas Ibrahim, whose convoy was passing by at the time.