A senior police officer said the ill-fated mini-bus carrying tourists from Mumbai [ Images ] was on its way to Srinagar [ Images ] from south Kashmir tourist resort of Pahalgam.
The injured passengers were immediately evacuated to hospital and condition of at least two others is stated to be critical.
"Two tourists died on the spot while six others are wounded. The injured have been evacuated to Bejibhara hospital," the officer said. He said militants had tossed a powerful grenade, which exploded inside the mini-bus.
Senior police officers have rushed to the spot.
The traffic on the Srinagar- Jammu highway has been disrupted. No group has yet claimed responsibility for the blast.
The blast came on a day when life in Kashmir is hit by a protest shutdown called by the hardline separatist leader Syed Ali Shah Geelani [ Images ] against the killing of a youth in north Kashmir's Bandipore district.