It was the third bomb in two days in the Philippines which is already on high alert following the Bali bombing last Saturday.
The explosion ripped through the rear of the bus injuring about 20 others.
Investigators have no suspects yet and are gathering fragments from the bomb to analyse. Three bodies have been found, but investigators fear there may be more.
The blast comes a day after seven people were killed and more than 100 injured in two bomb explosions in the mostly Christian city of Zamboanga in the south.
Police said the Zamboanga attacks bore the hallmarks of the Abu Sayyaf guerrillas, a group linked to the al-Qaeda network of Osama Bin Laden.
Abu Sayyaf recently threatened attacks in retaliation for a military offensive against it, and has been blamed for another bombing in Zamboanga on 2 October that killed four people, including an American Green Beret commando.
Manila panic
The Philippines has been on high alert since the bomb attack in Bali in neighbouring Indonesia killed more than 180 people.
Some 300 police officers are patrolling major shopping malls amid fears of attacks similar to those in Zamboanga.
There was panic in Manila earlier on Friday when a grenade exploded in the Makati financial district. No-one was injured.
Later a bomb scare prompted the evacuation of a high-rise office building.
The latest blast happened late at 2200 local time (1400 GMT) as the bus was travelling through Quezon City.
The explosion in the back of the blue Golden Highway company bus ripped off its roof and sent debris flying 20-30 metres.
President's plea
National police operations chief Vidal Querol said: "This is the handiwork of people with evil minds."
Teenage student Merlyn Villareal, who was aboard the bus but was not injured, told GMA7 television: "I was sleeping, then there was a very loud explosion."
"There was chaos, and I was pinned down. I was kicked around and found myself outside the bus."
President Gloria Arroyo visited Zamboanga on Friday, saying the country's bomb attacks had gone from "bad to worse" and urged Filipinos to help fight terrorists.
"Terrorism cannot survive for long in an unfriendly environment," she said.
"Let us give terrorism the unfriendly environment."