The massive blast hit a crowd of people watching a dog-fighting contest.
"This suicide attack was the work of the Taleban," said Governor Assadullah Khalid, adding the death toll may rise.
Southern Afghanistan is a Taleban stronghold and last week the Kandahar governor himself was the target of an attempt on his life.
The Taleban have not claimed responsibility for the blast, but it bears all their hallmarks, says the BBC's Jon Brain in the Afghan capital.
Among those killed was Abdul Hakim, a local police chief fiercely opposed to the Taleban who is thought to have been the target of the attack.
Body parts
Excitement was mounting among the 500-strong, male-only crowd when the huge blast struck.
I counted over 40 people on the ground dead Abdul Karim,Dog-fight spectator
Dog-fighting competitions, which were banned under the Taleban regime, are a popular pastime in Afghanistan.
"Fighting had just started between two dogs," said one spectator, Abdul Karim.
"Suddenly I heard a huge explosion next to a police vehicle. Then I saw lots of people dead and wounded.
"I counted over 40 people on the ground dead," Mr Karim, 53, told the AFP news agency.
Twisted car and bicycle parts littered the ground as shawls and shoes lay scattered among the bodies of the dead and wounded.
Injured spectators staggered through the carnage searching for relatives.
Scores of wounded were packed into civilian cars and rushed to hospitals in the city centre, some 15km (nine miles) away.
The massive blast hit a crowd of people watching a dog-fighting contest.
"This suicide attack was the work of the Taleban," said Governor Assadullah Khalid, adding the death toll may rise.
Southern Afghanistan is a Taleban stronghold and last week the Kandahar governor himself was the target of an attempt on his life.
The Taleban have not claimed responsibility for the blast, but it bears all their hallmarks, says the BBC's Jon Brain in the Afghan capital.
Among those killed was Abdul Hakim, a local police chief fiercely opposed to the Taleban who is thought to have been the target of the attack.
Body parts
Excitement was mounting among the 500-strong, male-only crowd when the huge blast struck.
I counted over 40 people on the ground dead Abdul Karim,Dog-fight spectator
Dog-fighting competitions, which were banned under the Taleban regime, are a popular pastime in Afghanistan.
"Fighting had just started between two dogs," said one spectator, Abdul Karim.
"Suddenly I heard a huge explosion next to a police vehicle. Then I saw lots of people dead and wounded.
"I counted over 40 people on the ground dead," Mr Karim, 53, told the AFP news agency.
Twisted car and bicycle parts littered the ground as shawls and shoes lay scattered among the bodies of the dead and wounded.
Injured spectators staggered through the carnage searching for relatives.
Scores of wounded were packed into civilian cars and rushed to hospitals in the city centre, some 15km (nine miles) away.