Videos posted on Twitter, purportedly from Chabahar, showed thick smoke rising from the area.
There was no immediate claim of responsiblity for the attack.
Chabahar is located in the southeastern province of Sistan and Baluchestan, which is home to a Sunni minority in the largely Shia country, and has always been plagued by violence from both drug smugglers and separatists.
India on Thursday strongly condemned the terrorist attack in Iran's Chabahar where a suicide auto bombing followed by an armed assault killed at least two outside police headquarters on Thursday.
"Police stopped the explosive-laden auto and started firing at the driver. who then set off the explosion near the police headquarters in Chabahar", said Bameri.
Iran´s Foreign Minister Mohammad Javad Zarif says "such crimes won´t go unpunished".
Washington has granted exceptions to some USA sanctions on Iran for the project.
Pakpur also said several hours after the explosion that calm and security had returned to the city of Chabahar.
Chabahar is a free trade zone and the site of an Indian-backed port complex being developed as part of a new transportation corridor for landlocked Afghanistan.
India is developing the Chabahar port along with Iran and Afghanistan.
India Thursday strongly condemned the terrorist attack in Chabahar in Iran.
The attack comes as Iran's economy is reeling in the wake of the U.S.re-imposing sanctions lifted under Tehran's nuclear deal with world powers.
Arab separatists and the militant Islamic State (IS) group both claimed the assault.
"The terrorist grouplets are mainly linked to foreign security services like those belonging to Saudi Arabia, and have constantly been seeking to destabilize our border regions", said the IRGC official.
Iranian Interior Minister Abdolreza Rahmani Fazli also issued a statement in condemnation of the Chabahar terror assault, saying the "savage attack" proved again that the "evil hegemonic system would spare no plot" to target the nation. Mark my words: "Iran WILL bring terrorists & their masters to justice".