The attack took place a day before Prime Minister Ahmet Davutoglu, whose government has waged a relentless campaign against Kurdish rebels since last summer, was to make a rare visit to the city.
Speaking to AFP, the source said a remotely-operated car bomb went off as a police vehicle drove past the city's main bus terminal. Of the 23 wounded, nine were civilians and the rest police.
Ambulances rushed to the scene, where images showed the police bus reduced to a burnt-out wreck by the force of the blast.
Turkish forces have been engaged in an ongoing operation against rebels from the outlawed Kurdistan Workers Party (PKK) in the region that has resulted in ferocious clashes and heavy casualties on both sides.
Hundreds of security force members have been killed since the PKK resumed its more than three-decade insurgency last summer.
The new upsurge of violence between the security forces and Kurdish rebels erupted in July 2015, shattering a two-and-a-half year truce.
President Recep Tayyip Erdogan said this week that 355 members of the security forces had been killed in the fighting, along with 5,359 members of the PKK. It was not possible to confirm the toll on the rebel side.
Over 40,000 people have been killed since the PKK took up arms in 1984 demanding a homeland for Turkey's biggest minority. Since then, the group has pared back its demands to focus on cultural rights and a measure of autonomy.
A radical PKK offshoot, the Kurdistan Freedom Falcons (TAK), claimed responsibility for two suicide car bombings in Ankara this year that left dozens dead.
Turkish air force planes have bombed PKK hideouts in mountains across the border in northern Iraq as well as in remote areas of southeast Turkey.
Ankara has vowed to smash the PKK, and authorities have imposed curfews in several towns in the region because of the fierce clashes.
Kurdish activists have accused the government of masking the extent of the civilian toll from the fighting and also vastly exaggerating the PKK losses.
The government denies the claims, saying the operations were an essential move against the PKK which had put up barricades and dug trenches in a bid to take over Turkish urban centres.
By Mahmut Bozarslan, AFP