Two vehicles drove into the crowd at a central market of provincial capital Urumqi at 7.50am (23.50 Wednesday GMT) and explosives were thrown out of them, state news agency Xinhua reported, citing witnesses.
One vehicle then exploded. A vendor reported hearing a dozen loud bangs, the report said. Photos posted by one user on Twitter and picture-sharing site Tumblr showed at least four bodies on the ground, with flames and heavy smoke in the background.
Emergency service vehicles appeared to be tackling the blaze and taking the injured to hospital. Police cordoned off the area on Renmin Road, to the south of the city's People's Park, Xinhua said.
The incident came a day after courts in the far-western region sentenced 39 people to up to 15 years in prison for spreading videos and other content promoting terrorism.
They were the first sentenced in a crackdown leading to the arrest of 232 suspects since the beginning of April, the Xinjiang Regional Higher People's Court said.
It followed recent terrorist attacks blamed on ethnic Uighurs, a mainly Muslim group who make up about 8 million of Xinjiang's 21.8 million people.Many Uighurs complain of cultural and religious repression, and claimthat ethnic Han Chinese migrants enjoy the main benefits of development in the resource-rich but econmically backward region.