Lebanon's Health Ministry said at least five people were killed and 20 wounded in the blast, which sent a plume of black smoke into the sky over the Lebanese capital.
The explosion hit the Haret Hreik district during rush hour and images broadcast on Hizbollah's Al-Manar TV showed firefighters putting out several cars that were ablaze.
The footage showed at least one building that had its facade blown off, and several neighbouring buildings were also damaged.
The nature of the explosion was not immediately clear, but a Lebanese security official said it appeared to be caused by a car bomb.
Hizbollah security agents and Lebanese troops worked to cordon off the area to keep angry crowds away from the blast site.
Accountant Ali Oleik, who works in a nearby office, said: "Suddenly, the whole area went bright and we started running away. I saw two bodies on the street, one of a woman and another of a man on a motorcycle who was totally deformed."
In November, 25 people were killed by suicide bombers at the Iranian embassy in southern Beirut, and explosions have also hit other nearby Hizbollah districts and Sunni mosques in the northern city of Tripoli.
The conflict in neighbouring Syria has polarised Lebanon and heightened sectarian tensions.
Hizbollah has sent fighters to Syria to join the forces of President Bashar al Assad, who is from the Alawite offshoot of Shi'ite Islam, while Sunni Muslim fighters have gone to Syria to fight for rebels trying to topple him.

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