It is not immediately clear what caused the explosion at Ain al Hilweh, one of 12 refugee camps in Lebanon, the Lebanese Broadcasting Corporation said.
The blast injured Shehadeh Jawhar, a leader of Jund al-Sham, a 50-60-men-strong militant group formed in the refugee camp in 2004 and considered to be a splinter of Osbat al Nour, blacklisted by the U.S. as a terrorist faction linked to al-Qaeda.
Jund al-Sham, meaning Soldiers of Greater Syria, has claimed responsibility for a number of bombings in Lebanon and Syria.
The explosion came amid ongoing fighting between the Lebanese army and Fatah al-Islam militants in another Palestinian refugee camp in the north of the country. The battles, which are continuing for a fifth week, have claimed the lives of at least 150 people.