The blast sent a huge plume of black smoke into the air above the village of Ain Qana, which is a stronghold of the militant Shia Islamist movement.
Ambulances rushed to the scene amid unconfirmed reports of several wounded.
One security source said the blast was caused by a "technical error", although the state news agency noted that it had coincided with Israeli overflights.
The Israeli military did not comment on the incident.
The Lebanese Army said in a statement that the explosion occurred at about 15:00 local time (12:00 GMT) in a building in Ain Qana.
