Berbers have been seeking social and political change
The device went off on what was normally a busy market day in Tazmalt, 80 kilometres (50 miles) from Kabylie's second largest city Bejaia - about 250 km east of Algiers.
No-one claimed responsibility for the attack, but such violence is usually blamed on radical Islamic groups who have been fighting the government since the cancellation of elections in 1992.
However, it is unusual for Berber civilians to be targeted indiscriminately in this war by the Islamists, although there have been several assassinations in this area in the past, says the BBC's David Bamford.
The bomb went off near the entrance of the popular open-air market, where people from the region come every week.
Rival factions
As Algeria prepares for parliamentary elections at the end of this month, there have been a series of bomb attacks and ambushes to the south and west of Algiers.
The Kabylie region has been experiencing months of internal unrest between rival Berber factions, one of which has taken up a government offer of dialogue on improved Berber rights, and another more militant group which has opposed this.
Both of the officially recognised Berber parties have refused to take part in the forthcoming elections.