Stockholm police say they were called to Åkersberg at around 8am after witnesses spotted a car on fire in a parking lot. Police then cordened off the area.
"It sounded like it was a car bomb. Then there was a child screaming, but when I reached the spot I could not see any injuries," local resident Jens Fjelkestam told the newspaper Expressen.
Bomb Technicians have arrived at the scene and officers are also using sniffer dogs to search for further possible explosives.
According to the TT news agency, a man in his 30s was injured following the fire early this morning and taken to hospital.
Police have launched an investigation for attempted murder or manslaughter.