The bombing took place near Bursa's 14th century Grand Mosque, a historic symbol of the city that was the first capital of the Ottoman empire.
"A woman believed to be a suicide bomber blew herself up. Seven citizens were injured according to initial findings," said a statement from the local governor's office.
Security sources confirmed that the blast was a "suicide attack", while Turkish media identified the bomber as a 25-year-old woman.
Nobody has yet claimed responsibility for the blast.
The powerful explosion smashed windows in shops near the mosque, and television footage showing the injured being treated in ambulances.
Police sealed off the area for investigation.
Today's attack came just a day after the US embassy in Ankara issued a new security alert for Turkey.
"The US government continues to receive credible indications that terrorist groups are seeking opportunities to attack popular tourist destinations throughout Turkey," the embassy said on its website.
Bursa, once major trading post on the route linking Asia to Europe, is an industrial hub and Turkey's fourth largest city with a population of 2.7 million.
It lies across the Marmara Sea from Istanbul, the largest city in Turkey that has often been the target of attack.
Ankara launched an offensive against the outlawed Kurdistan Workers' Party (PKK) after the collapse in 2015 of a two-year ceasefire in a renewed conflict that has left many dead in the mainly Kurdish southeast of the country.
Four Israelis and an Iranian were also killed in a suicide attack on March 19 in Istanbul, while a January attack in the city's ancient touristic heart killed 11 German tourists.
