"This was a terror attack involving the explosion of a powerful explosive," the force said in a statement.
On Sunday authorities reported that the blast in the commercial hub of Tel Aviv had killed one person, who Israeli media said was the suspected assailant.
"As a result of the explosion, a passerby was moderately injured," the police said, adding that authorities had ordered "an increase in alert levels and extensive searches throughout the greater Tel Aviv area".
The blast late on Sunday came shortly after US Secretary of State Antony Blinken arrived in Tel Aviv to push for a ceasefire in Gaza after more than 10 months of war, and as fears grow of a wider, regional conflagration.
Blinken, on his ninth regional tour since the start of the Israel-Hamas war, met with Prime Minister Benjamin Netanyahu and other top Israeli officials.
