The blast is thought to have occurred during evening prayers, killing at least three people and injuring dozens more, according to the NGO Emergency.
Khalid Zadran, the Taliban's Kabul police spokesman, was quoted by local media as saying there had been an explosion in the city's north-west.
Reports say the Siddiqi mosque's imam was among the dead.
It is unclear who was behind the attack, which comes the week after a prominent pro-Taliban cleric was killed in a suicide bomb blast, also in Kabul. The Islamic State (IS) group claimed responsibility for the earlier attack.
Security forces have arrived at the scene, in a northern Kabul neighbourhood, the spokesman added.
Italian NGO Emergency - which operates in Kabul - said three deaths have been recorded so far.
The NGO also tweeted to say it had received 27 people wounded in the blast, including children. "Five children [were] among them, including a seven-year-old," it said.
A Taliban intelligence official told news agency Reuters that as many as 35 people may have been wounded or killed, and the toll could rise further.
Witnesses described hearing a powerful explosion which shattered windows in nearby buildings.
The official, who spoke on condition of anonymity, said the explosion took place at a mosque among worshippers in the Khair Khana area of Kabul.
Intelligence teams were at the blast site and investigations are ongoing, they added.
A spokesman for the Taliban said it strongly condemned the attack.
The mosque was crowded, the bomb powerful, and another cleric seems to have been in the sights of IS (Islamic State), the group which has emerged as the Taliban's most potent enemy.
In the past month, three prominent religious leaders were targeted in Kabul and there were assassinations in other cities.
Last week it was Sheikh Rahimullah Haqqani, known to be close to the Taliban. This time it's Amir Muhammad Kabuli, said to be an adherent of the more moderate Sufi faith.
Video posted on social media showed a scene of carnage.
One religious student who was just outside the mosque told the BBC he saw the bodies of the dead and injured sprawled inside, including children attending evening prayers.
IS's signature has been its devastating attacks on the minority Shia Hazara community. But their focus now seems to be widening just as the Taliban celebrate their one year in power - a takeover which ended one chapter of a long bloody war but only ushered in yet another.
News ID : 1145