The bomb ripped through a region where members of the royal family live but no one was hurt in the incident which took place in Riffa, southern Manama late Wednesday.
Government officials said that the move was aimed at escalating sectarian tensions, but no trace was found as who was behind the incident.
The blast also damaged several cars parked in the area but there was no report of injuries.
A manhunt was launched by the police to find perpetrators who stashed away a gas cylinder inside a car.
The explosion has drawn condemnations countrywide including from the opposition al-Wefaq party and King Hamad bin Issal al-Khalifa.
“The demands of the political majority in Bahrain are democratic transition that adopted peaceful methods,” Al Wefaq party said in the statement posted on its website.
Bahrain has been the scene of demonstrations since mid-February 2011. Thousands of pro-democracy protesters have staged numerous demonstrations in the streets of Bahrain, calling for the Al Khalifa family to relinquish power.
Following the eruption of the protests, the Bahraini regime promptly launched a brutal crackdown on the peaceful protests and called in Saudi-led Arab forces from neighboring states to assist the suppression.
Dozens of Bahraini people have been killed in the crackdown, and the security forces have arrested hundreds, including doctors and nurses.
MRKD/SHI