At least 18 people were injured in an explosion near the main bus stand in Jammu around noon on Thursday.
Inspector General of Police M.K. Sinha said it was a grenade explosion.
"18 civilians sustained splinter injuries and were taken to hospital," he said.
Experts are examining the site, said the police after sealing off the area.
PTI adds:
This is the third grenade attack by terrorists in the bus stand area of the city since May last year.
The scene of the blast along the B C Road was sealed off by police and a massive hunt has been launched to nab the grenade thrower, Mr. Sinha said.
Mr. Sinha, who immediately rushed to the scene to take stock of the situation, said preliminary investigation suggests that someone lobbed the grenade, causing injuries to 18 people who were evacuated to the Government Medical College (GMC) hospital.
Windscreens of a parked State road transport corporation (SRTC) bus were damaged in the blast, a police official said, adding condition of one of the injured was stated to be "critical".