The explosion took place near the Sultanahmet Tram station and Dikilitaş, the Obelisk of Theodosius, at around 10:20 a.m. local time.
Many ambulances and police units have been dispatched to the scene of the explosion, while the injured are being transferred to local hospitals.
Bomb squad teams have also arrived at the scene as police sealed off the area.
The Sultanahmet district is home to the Hagia Sophia museum and Istanbul's iconic Blue Mosque, one of the most popular tourist attractions in Turkey.
Turkey suffered two major bombing attacks last year.
More than 30 people were killed in a Daesh suicide attack in the town of Suruç, near Turkey's border with Syria, in July.
Two suicide bombs in October outside Ankara's main train station as people gathered for a peace rally killed more than 100 people. It was Turkey's deadliest attack. The prosecutor's office said the attack was carried out by a local Daesh cell.
Source: Daily Sabah