At least one person was killed and nearly 80 wounded Saturday in a bomb attack outside the main Shia site in the Bangladeshi capital as thousands gathered for the annual Ashura procession, police said.

Police said it was believed to be first time Bangladesh's tiny Shia Muslim community has been targeted and came just weeks after an Italian aid worker and a Japanese farmer were shot dead in attacks claimed by Islamic State group.

Officers said a 14-year-old boy died on the spot after three small bombs were thrown outside the Hossaini Dalan, the main Shia site in the old Mughal quarter of Dhaka, at about 2:00 am Saturday (2000 GMT Friday).

"There were some 20,000 people in and outside the building at that time. They were preparing to hold the annual Muharram mourning procession when the three (bombs) were exploded outside the Hossaini Dalan," deputy commissioner of Dhaka Police Mofiz Uddin Ahmed told AFP.

Local police chief Azizul Haq said at least one person was killed and around 80 injured in the attack.

"We've recovered two unexploded bombs. These are like explosive devices and almost like grenades and fitted with batteries," Haq told AFP.

Police inspector Mozammel Hoque told AFP that most of the injured were hit by bomb splinters but none was in critical condition.

"Some 50 were brought to the Dhaka Medical College Hospital. A 14-year-old boy was brought in dead. He died due to the explosion," he said.

Ashura marks the climax of the holy month of Muharram when Shia hold processions and gatherings to mourn the martyrdom of the Prophet Mohammed's grandson Imam Hussain at the Battle of Karbala in Iraq in 680 AD.

Witnesses told the mass-circulation daily Prothom Alo that many mourners fell to the ground as loud explosions went off just outside the Hossaini Dalan, the most important prayer and congregation site for Bangladesh's Shia.

Roni, who uses one name, said mourners in black were holding prayers just before the procession when he heard 8-10 explosions and saw a fire.

Local television station Somoy TV showed live footage of people running helter skelter moments after the blasts. Many people including girls were seen being taken to hospital by ambulance.

The explosions came amid weeks of heightened tension in Bangladesh after the Islamic State group claimed its first attacks in the mainly moderate Sunni country of 160 million people.

Police and the authorities, however, have rejected the claim, saying they do not believe the group exists in the country.

While it was believed to be the first attack on Shia in Bangladesh, in the past two years banned Islamist militant groups have killed more than a dozen Sufi Muslims and attacked Hindus and Christians.

Experts say Islamist militants pose a growing danger in Muslim-majority Bangladesh, warning that a long-running political crisis has radicalised opponents of the government.

The killing of four atheist bloggers since the turn of the year undermines the government's efforts to play down the threat posed by hardliners, experts say.