Israeli police said the blast occurred at about 3am local time (1am BST) on Friday morning.
One person, a 50-year-old man, was killed by shrapnel.
“Numerous police officers and bomb disposal experts have arrived on the scene and are dealing with the situation,” police said.
Residents told local media that the loud boom shattered objects in their house.
“It came from the sea and there were no sirens,” an eyewitness told Israel’s Channel 12.
Magen David Adom, Israel’s national emergency service, said a a 37-year-old man and a 25-year-old woman were taken to a local hospital with shrapnel injuries, while at least four more people were treated for shock at the scene.
The Home Front Command said: “No aerial intrusion into the country’s central area was detected, and therefore no alarm was triggered – the incident is under investigation.”