The Dogan news agency said 10 people were injured in the blast in Istiklal Street, a wide street lined with shops, cafes, restaurants and foreign consulates.
NTV television said the explosion, which a number of media outlets in the country are reporting was caused by a suicide bomber, happened outside a shopping centre.
A witness told the Reuters news agency they saw police helicopters circling overhead, and television footage showed people running from the scene.
Police have sealed off part of the street, which adjoins Taksim Square in the European part of the city.
It comes as Turkey is on edge after two suicide bombings in the capital, Ankara, including one earlier this month that killed 37 people.
Both of those attacks were claimed by a Kurdish militant group that is an off-shoot of the outlawed Kurdistan Workers' Party, or PKK.
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