No group immediately claimed responsibility for the attack, which came as the Taliban steps up their summer offensive despite a bitter power transition within the militant movement.
A truck packed with explosives detonated just after midnight near an army base in the neighbourhood of Shah Shaheed, rattling homes across the city, ripping off the facades of buildings and leaving scattered piles of rubble.
The force of the explosion created an enormous crater in the road, around 10 metres (30 feet) deep, and destroyed the boundary wall of the base, although no military casualties were reported.
The health ministry said the number of wounded could run even higher, with most suffering injuries from flying glass.
Kabul police chief General Abdul Rahman Rahimi said officials were searching for anyone trapped under the mangled concrete debris.
"The killed and wounded include women and children, and labourers of a nearby marble stone company are among the victims. The attack was intended to cause mass murder," he said.
Soldiers erected a security cordon around the military base close to Shah Shaheed, a largely middle-class civilian residential area with no major foreign presence.
The carnage comes a day after Taliban insurgents killed nine people in multiple attacks on police targets, including a truck bombing in the volatile eastern province of Logar.
The attacks highlight growing insecurity in the country amid a faltering peace process with the Taliban as Afghan forces face their first summer fighting season without full NATO support.
The NATO mission in Afghanistan condemned Friday's bombing as a "contemptible act of violence".
Taliban spokesman Zabihullah Mujahid told AFP he was "unaware" of the Kabul bombing. The militants are known to distance themselves from attacks that result in a large number of civilian casualties.
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