The blast occurred near the kindergarten and victims were taken to hospital, according to the Fengxian county government in Jiangsu province.
Images circulating online showed that the force of the blast tore people`s clothes off and one woman was seen clutching her child, who is in tears.
Xinhua news agency, citing the emergency office of Xuzhou city, said the explosion happened at the gate just as children were leaving the school in the afternoon.
An official at the police station in Fengxian county told AFP that the cause of the blast was under investigation.
At least seven people were killed and 66 injured, including nine seriously, according to Xuzhou city government. Two died at the site of the explosion and five while being treated.
Pictures of the scene showed more than a dozen people outside a building, many lying on the concrete and some appearing to be unconscious, including a small child.
Another video posted by the People`s Daily shows emergency workers arriving at the scene with gurneys. Another shows people lying in a hospital.
Online media reports cite a business owner near the kindergarten as saying that around 5:00 pm (0900 GMT) he heard a “bang”, and found that there had been an explosion at the kindergarten entrance only 100 metres away.It is the latest tragedy to strike a kindergarten in China in recent weeks.
A school bus packed with kindergarten pupils erupted in flames inside a tunnel in eastern Shandong province on May 9, killing 11 children, a teacher and the driver.
Officials later said the fire was intentionally set by the driver, who was angry at losing overtime wages.
In the meantime, The two pilots flying the Malaysian air force Hawk 108 training aircraft, which was reportedly missing earlier have been found dead in a forest swamp, the Malaysian Air force commander Affendi Buang said on Thursday.
The two pilots, aged 31 and 39 respectively were found in the state of wearing their parachute.
However, the cause of death was yet to be determined, according to a report from Bernama news agency.
The wreckage of the missing plane, a two-seat trainer jet, is also yet to be found.
The plane took off from an airbase in Kuantan at 11a.m. local time but lost contact half an hour later.
Affendi announced at the press conference that the air force would form a special body to investigate the incident, and before that, all Hawk 108 flights would be suspended.
Hawk is a single-engine training jet manufactured by British BAE systems.
It could be also used as a combat aircraft.
Aviation International News reported in March that BAE Systems will help the Malaysian air force, which previously operates six Hawk 108s, upgrade the 12 single-seat 208s.
The Hawk jets were all purchased in the 1990s.