One civilian and a conscript died in the explosion which took place late last night, medical and security sources said.
The bomb was planted by unknown militants and went off when an armoured vehicle belonging to security forces passed by it in Al-Bahr street in Al-Arish city, the sources said.
A number of civilians in the area were also injured, they added.
Ambulances were rushed in to the place of the incident and the injured were taken to the hospital.
Egypt's North Sinai has witnessed many violent attacks by militants since the January, 2011 revolution that toppled the ex-president Hosni Mubarak.
The attacks targeting police and military increased after the ouster of Islamist ex-president Mohamed Morsi in 2013 by military following massive protests against his rule.
Over 600 security personnel have been reported killed since then.
The military has launched security campaigns in the area, arrested suspects and demolished houses that belong to terrorists, including those facilitating tunnels leading to the Gaza Strip.
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