A huge car blast hit an affluent residential compound, Muhaya, housing mainly Arab families in Riyadh, Saudi Arabia, early Sunday.
Early reports had said there were three explosions.
It was not clear how many had died -- television channels put the toll between 20 and 30, while the Saudi interior ministry said two persons -- an Indian and a Sudanese -- were killed. It also put the blame for the blast on the Al Qaeda.
"A huge explosion blew out the windows. I saw a lot of people injured and I believe there a lot of people dead," Bassem al-Hirani, an Arab resident of the Muhaya compound, told the Al Arabiya television network.
"I heard screams of the children and women... I saw a lot of people injured and I believe there a lot of people dead," he said.
It quoted its sources as saying that the compound was around 1.5km away from the homes of several top members of Saudi Arabia's ruling family.
A Saudi journalist told Al-Jazeera network that a shootout took place in the compound.
There was a large fire in the compound, he added.
Television footages showed a large plume of smoke over the compound.
At least two-dozen ambulances rushed to the compound, which houses hundreds of residents.
At least ten buildings were completely destroyed, according to reports.
The attack took place when most of the adult resident were out for Ramzan observances, leaving their children behind, the reports said.
US missions in Saudi Arabia said Friday that they would be closed Saturday to at least Monday because of terrorist threats.
An advisory released on Friday by the US embassy in Riyadh said it "continues to receive credible information that terrorists in Saudi Arabia have moved from the planning to operational phase of planned attacks in the kingdom".
Twenty-nine people were killed and 194 injured in a terrorist attack in the Saudi capital in May this year.
The dead also included nine suicide bombers who had shot their way into three compounds housing Westerners.