Turkish President Recep Tayyip Erdogan says a Syrian suicide bomber is believed to be responsible for Tuesday's blast in Istanbul that killed at least 10 people and wounded 15 others.
Erdogan condemned the attack in a televised address and said Turks and foreigners are among the dead.
The explosion hit Istanbul's historic Sultanahmet district, a major tourist area that is home to attractions such as the Blue Mosque and Haga Sophia.
Witnesses described the blast as loud and said it shook the ground.
Prime Minister Ahmet Davutoglu convened an emergency security meeting after the attack.
Turkey has been on alert for attacks since an October double suicide bombing killed more than 100 people at a gathering of peace activists outside a train station in the capital, Ankara.
The government cancelled planned New Year's celebrations in Ankara after detaining two suspected Islamic State members believed to be planning suicide attacks.
Turkish warplanes are taking part in the U.S.-led campaign of airstrikes targeting Islamic State militants in Syria.