The blast happened at a karaoke bar on Jolo, an island hit by attacks by Abu Sayyaf Islamic rebels. US troops are on Jolo for counter-terrorism exercises.
US military officials said that no US servicemen were among those hurt, and said planned exercises would continue.
A spokesman said Abu Sayyaf, which has kidnapped Americans in the past, did have the capability to attack the bar.
The blast happened at a temporary karaoke bar erected close to the gates of Jolo's army base, Brigadier General Alexander Aleo told the Reuters news agency.
About 250 US troops are due to join Filipino units for annual exercises beginning on Monday.
"We don't know who was behind the attack. But there's only one group capable of doing this - it's the Abu Sayyaf."
Jolo has seen regular attacks by Abu Sayyaf in recent years, despite US-backed counter-insurgency efforts by the Philippine army.
An explosion has been reported near the gate of the Philippine army's 104th Brigade headquarters, inside a karaoke bar on southern Jolo Island. At least 20 people are reported to have been injured. 

According to witnesses, most of the wounded were female entertainers, and men who were drinking at the bar.

U.S troops are encamped on the grounds for joint military exercises.

Security is a major concern for these exercises, mainly due to the presence of the Abu Sayyaf guerilla group, which is related to Al-Qaeda, and is stationed about 580 miles south of Manila.

Lt. Col. Mark Zimmer, a military spokesman said that no American deaths have been reported.