According to reports, the target of the attack was a convoy of foreign troops, but all those killed were civilians.
Many other people were wounded in the attack including two soldiers, a local police chief told AFP news agency.
An official said the attacker was on a motorbike and set off his explosives near an international military convoy in a market area of Gereshk district.
Gereshk is on a major road that passes through the province.
"The blast took place in a crowded bazaar in the centre of the district. That is why it caused so many casualties," said police chief Abdul Razeq.
No group has admitted responsibility for the incident, but Taleban militants have carried out similar attacks in the past.
Lt Col Nick Richardson, spokesman for the British-led Nato contingent in the province, said: "We are aware of an incident which has taken place this afternoon in southern Afghanistan involving Isaf (International Security Assistance Force) troops. Further information will be released when available."
The Taleban still hold territory in Helmand province, mostly in the southern areas.
The US is to send more than 8,000 Marines there in coming weeks to double the size of the mainly-British force.