A good number of families were present at the food street when a time device exploded, police said.
The device was planted outside Bokhara restaurant and the blast damaged several food outlets in the street besides vehicles parked at nearby roads, they said.
District Coordination Officer (DCO) Lahore Nasim Sadiq confirmed that at least two persons were killed in the blast.
"Two people have been killed and several injured," the DCO told reporters, adding that half kilogramme of explosive material had been used.
The condition of some seven injured was critical, said Rescue 1122 spokesman Jam Sajjad, who also confirmed the two deaths.
A large number of families dine at the food street every weekend, according to an eyewitness.
"I was dinning with my seven-year-old son and wife when we heard a big bang. My son fell unconscious. Thank God he is alright," Khalid Shiekh said.
Lahore Police chief Chaudhry Shafiq said those behind the blast wanted to create panic among the masses.
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