U.S. Ambassador Francis Ricciardione told reporters that a guard at the gate was killed in the 1:15 p.m. blast, and a Turkish citizen was wounded.
The bomb appeared to have exploded inside the security checkpoint at the side entrance of the embassy, but did not do damage inside the embassy itself. Footage showed that the door had been blown off its hinges and debris littered the ground and across the road. An Associated Press journalist saw a body in the street in front of an embassy side entrance.
Police swarmed the area and several ambulances were dispatched. An AP journalist saw one woman who appeared to be seriously injured being carried into an ambulance.
The police official, who spoke on condition of anonymity in line with government rules, said police had examined security cameras around the embassy and had identified two people who could have been the suicide bomber.
The embassy building is heavily protected. It is near an area where several other embassies are located, including that of Germany and France. Police sealed off the area and journalists were being kept away.
The phones were not being answered at the embassy. In a statement, it thanked Turkey for "its solidarity and outrage over the incident."
There was no claim of responsibility, but Kurdish rebels and Islamic militants are active in Turkey. Kurdish rebels, who are fighting for autonomy in the Kurdish-dominated southeast, have dramatically stepped up attacks in Turkey over the last year.
As well, homegrown Islamic militants tied to al-Qaida have carried out suicide bombings in Istanbul. In a 2003 attack on the British consulate, a suspected Islamic militant rammed an explosive-laden pickup truck into the main gate, killing 58, including the British consul-general.
In 2008, an attack blamed on al-Qaida-affiliated militants outside the U.S. Consulate in Istanbul left three assailants and three policemen dead.
Turkey has become a harsh critic of the regime in Syria, where a vicious civil war has left at least 60,000 people dead. The first of six Patriot missile batteries being deployed to Turkey to protect against attack from Syria was declared operational and placed under NATO command on Saturday and others were expected to be operational in the coming days.