The car bomb struck a US military convoy, killing two US soldiers and 14 civilians in one of the deadliest attacks to hit the heavily secured city.
The Kabul blast was less than 100 metres from the barricaded US embassy and scattered human flesh, pieces of the vehicle and rubble across a wide area.
The bodies of two dead soldiers in US uniform were flung about 30 metres from a destroyed Humvee vehicle, next to a turret, which had also been thrown off by the force of the blast.
Immediately afterwards the Humvee and the shattered vehicle that had carried the bomb were in flames as scores of security personnel and firemen rushed to the scene.
Trees caught alight and shop windows were shattered.
"I can confirm there are two US servicemen killed and two wounded," coalition spokesman Colonel Thomas Collins told news agency AFP.
The head of the Kabul criminal investigation department, Alishah Paktiawal, confirmed that 14 Afghans were killed and 29 wounded.
At least four of the dead were municipality workers who had been cleaning the busy road when the blast struck, policemen at the site said.
"It was a huge explosion," said a Kabul traffic policeman who had been about 35 metres from the blast site.
President Hamid Karzai condemned the attack. "Today's heinous act of terrorism is against the values of Islam and humanity," he said in a statement.
The Taliban movement that is waging a guerrilla-style insurgency claimed responsibility for the suicide attack and for another that struck a civilian convoy near the southern city of Kandahar earlier, which killed only the bomber.
Friday's strike in Kabul came amid a surge in violence across the country, with rebels attacking troops in mass formations while keeping up almost daily suicide and roadside blasts targeted mainly at Afghan and foreign soldiers.
The Italian defence ministry said four Italian soldiers were wounded in a bomb blast on Friday in the western city of Farah.
Three British soldiers died on Wednesday while another 14 British personnel were killed when their Nimrod reconnaissance plane crashed last Saturday.
Strong resistance in south
Much of the Taliban-linked violence is in the south, the heartland of the movement and where ISAF took command of 10,000 mainly British, Canadian and Dutch troops on July 31.
About half of the total ISAF force of 21,000 troops from 37 nations is in the less dangerous north, west and in the capital.
The NATO-led force has admitted that the ferocity of the Taliban resistance in the south has been greater than expected.
"The intensity and ferocity of the fighting is far greater than in Iraq on a daily basis," senior British commander Brigadier Ed Butler told British broadcaster ITV News.
NATO's military commander General James Jones called on Thursday for "modest reinforcements" of those down south -- between 2,000 and 2,500 troops that may be moved there from other parts of the country.
Call for reinforcements
The Kabul attack came as NATO allies were due to meet in the Polish capital to discuss the request to bolster their forces.
While the call for more troops and equipment was high on the agenda at the Warsaw talks, but Canadian Colonel Brett Boudreau, spokesman for the chairman of the NATO military committee, insisted it was not a distress signal.
"Speaking of 'reinforcements' is misleading in the context of what General Jones said," Col Boudreau told AFP. "It sounds like we need to call in the cavalry because things are going badly. That's not the case."
He added: "NATO in most operations can get by with about 85 percent of what we say we need. But the base population skill sets do not exist in Afghanistan. So we need to look for 100 percent of force levels and contributions.”
"The issue at this point is that we are engaged in combat in the south and until we can bring the security situation more in line with what it is in the north and west, which is relatively stable and secure … reconstruction and development have stalled," Col Boudreau said.