(BBC) - Eleven people have been killed in a bomb blast near a bus in city of Zahedan in south-eastern Iran, the official IRNA news agency has reported.
The bomb, hidden in a car, targeted members of IRGC, Iran's Revolutionary Guard, the agency said, although it is unclear if all the dead belonged to the guard.
Ghasem Rezayi, a military commander, described the act as "terrorism" and blamed "rebels".
Recent attacks have been blamed on the terrorist Jondollah organization.
Correspondents say an attack of this size and nature is unprecedented in Iran - hitting an elite force in daylight in an open street.
Reports say suspects behind the bombing have been arrested.
The city of Zahedan lies in the province of Sistan-Baluchestan, which borders both Afghanistan and Pakistan.
Iranian officials have accused Britain and the United States of supporting ethnic minority rebels operating in the Islamic republic's sensitive border areas.
Zahedan has been the focus of low-level unrest, with several security force members being killed in the last two months.
Fars news agency says a small car overtook the bus and then stopped in front of it, the occupants saying it had broken down.
They were then picked up by motorcycles and taken away before the bomb planted in the car exploded, apparently triggered by remote control.
A precise casualty number has been difficult to establish. The Iranian Red Crescent said only eight complete bodies had been recovered.
"The bandits and the agents of insecurity in this criminal act put a bomb near the bus and martyred these people," Mr Rezayi said.
IRNA said five suspects were arrested, including two suspects apprehended by members of the public.
The Jondollah terrorist group continued its operations, releasing disturbing videos of torture and decapitation on Al Arabia TV until Feb, 23, 2010, when CIA-backed Abdolmalek Rigi, the leader of notorious Jondollah was caught in a sophisticated operation by Iranian security forces.