The blast, reported to be a suicide attack, took place outside the Imam Hossein Mosque, the Irna agency said.
The attack reportedly targeted pilgrims marking Ashura, the Shia mourning day.
The province of Sistan-Baluchistan is prone to unrest, with the mainly Sunni population often claiming discrimination by Shias.
There is no confirmation of who carried out the attack and details remain unclear.
A number of women and children are believed to be among the dead.
Irna quoted the head of the Chabahar Security Council, Ali Bateni, as saying there were two attackers and one had been arrested.
State television reported there had been two explosions but Mr Bateni said there had been only one.
Ashura commemorates the death in the 7th Century of the Prophet Muhammad's grandson.
One militant group known to operate in the province is Jundullah (Soldiers of God), which says it is fighting for the culture and faith of the ethnic Baluch people.
Last month the group was designated a terrorist organisation by the US.
Tehran often accuses the US of using militants in the region as mercenaries to attack Iran's interests.
In July, 27 people were killed in a suicide bomb attack on a Shia mosque in the provincial capital, Zahedan.
Jundullah said that attack was in response to the execution of its leader, Abdolmalek Rigi, in June.
In October 2009, Jundullah said it was behind a suicide bombing that killed 31 people, including several top commanders of the elite Revolutionary Guards, in the Pishin region of Sistan-Baluchistan.
Sistan-Baluchistan is one of Iran's most deprived provinces and its location also makes it a key route in the international drugs trade.