No insurgent group immediately claimed responsibility for the ongoing assault on the Sardar Daud Khan hospital which is near US's embassy, but it comes as the Taliban ramp up attacks even before the start of their annual spring offensive.
No casualties were immediately reported but medical staff trapped in the facility posted desperate messages for help on social media. "Attackers are inside the hospital.
Pray for us," a hospital staff member wrote on Facebook.
Hospital administrators told AFP three gunmen wearing white laboratory coats were on the loose after the explosion struck, sparking chaos inside the 400-bed facility.
"The attackers are shooting everywhere," administrator Abdul Hakim told AFP by telephone.
"We are trying to bring the situation under control," he said in a frantic hurry before hanging up.
The attack comes a week after 16 people were killed in simultaneous Taliban suicide assaults on two security compounds in Kabul.
Dozens of others were wounded as a suicide car bomber struck an Afghan police precinct in western Kabul and a five-hour gun battle ensued after another attacker snuck in, sending clouds of smoke billowing into the sky.
In the second attack, a suicide bomber blew himself up at the gates of an Afghan intelligence agency branch in eastern Kabul.
The growing violence underscores rising insecurity in Afghanistan over the resurgent Taliban.
The country is bracing for an intense fighting season in the spring as the government´s repeated bids to launch peace negotiations with the Taliban have failed.