The explosion near the courthouse in Izmir was caused by a car bomb, the secretary general of the city municipality Bugra Gokce confirmed to the CNN Turk.
Earlier, it was reported that two cars exploded near the courthouse in the third most populated city in Turkey.
Immediately after blast, eyewitnesses reported a gunfire was heard at the scene.
Explosion reported in western Turkish city of İzmir followed by gunfire pic.twitter.com/uniDORwMZJ— Gilgo (@agirecudi) January 5, 2017
According to the Hurriyet Daily News reports, two militants entered in an armed clash with police after the explosion. Two terrorists, who organized the blast, were killed by Turkish police.
The police are currently searching for the third terrorist responsible for the attack.
Ambulances were sent at the scene. District Mayor Hasan Karadag told NTV television that at least 10 people were injured, one of the wounded was in serious condition.
The explosion occurred just a day after Turkish police detained 27 people in connection with the Istanbul nightclub attack who are suspected of having links with Daesh.
The Reina nightclub on Istanbul's European side was attacked during New Year's Eve celebrations by a man who, according to witnesses, was talking in Arabic. The attacker is said to have opened fire from a Kalashnikov assault rifle.
At least 39 people were killed, including more than 20 foreigners, and almost 70 were injured as a result of the attack. A manhunt is underway. The Islamic State terrorist group, outlawed in many countries, including Russia, has taken responsibility for the attack.