The bomber, who was riding an explosives-laden motorcycle, blew himself up near the entrance of Camp Eggers, a Nato spokesperson said, referring to a sprawling base that is home to 2 500 coalition personnel who train Afghan security forces.
The blast was the latest example of how militants are able to strike the heart of the Afghan capital even after more than a decade of fighting Western forces with far superior firepower. It also raises questions about Afghan forces' ability to combat insurgents once most foreign troops leave by the end of 2014.
Pieces of flesh and splattered blood lay on the street near the base, where small bodies were seen being lifted into ambulances, witnesses said.
Young children were among the dead, said Ministry of Interior spokesperson Sediq Sediqqi.
The Taliban took responsibility for the attack, saying they had despatched a bomber to target the Kabul offices of the US Central Intelligence Agency (CIA).
"One of our mujahideen targeted an important intelligence office used for recruiting Americans and Afghans for spying," Taliban spokesperson Zabihullah Mujahid told Reuters.
Sediqqi speculated on his Twitter feed that Saturday's attack, just before noon, may have been carried out by the Haqqanis, the most experienced insurgents in Afghanistan.
On Friday the United States said it is designating the Haqqani network – blamed for a number of high-profile attacks on Western and Afghan targets in Kabul – a terrorist organisation.
Senior Haqqani commanders told Reuters from an undisclosed location that the move showed the US was not sincere about peace efforts in Afghanistan and warned of more attacks on American forces in Afghanistan.
The bombing on Saturday happened as celebrations were underway in Kabul to commemorate the 11th anniversary of the death of Ahmad Shah Massoud, the hero of the 1980s war against Soviet occupiers, and later of opposition to the Taliban.
Massoud was killed on September 9 by al Qaeda militants posing as reporters. – Reuters