President Zelensky has condemned a “deliberate” attack on Ukraine’s “peaceful” city of Kostyantynivka.
At least 17 people, including a child, were killed in the blast, which took place on a busy market street in the middle of the day – a rarity.
Kostyantynivka, in Ukraine’s eastern Donetsk region, is near the front line.
Videos on social media show a bright orange explosion at the far end of a street where people were out shopping. Russia is yet to comment on the attack.
Volodymyr Zelensky, who has blamed Moscow, said those killed were “people who did nothing wrong” – and warned the death toll could increase.
Dealing with Russia, he said, meant turning a blind eye to the audacity of evil.
At least 32 people are thought to be injured. A market, shops and a pharmacy are all reported to have been hit.
“All services are working,” Ukrainian Prime Minister Denys Shmyhal assured residents afterwards, adding: “The fire is contained.”
Later on, just after 18:00 local time (16:00 BST), Ukraine’s Interior Minister Ihor Klimenko said the search and rescue operation had been completed.
Footage and images circulating online appear to show the moment of the explosion and its graphic aftermath.
It seems to be the worst attack of its kind for several months, and took place in a busy street as people were flocking to market stalls and café terraces.
An investigation into the attack has been launched by Ukraine’s prosecutor-general, whose office said it was in pursuit of “criminal proceedings for violation of the laws and customs of war”.
“Prosecutors are taking all possible and appropriate measures to record war crimes committed by the Russian Federation,” a statement added.
Officials in Russia have not yet claimed responsibility for the attack. They have previously denied targeting citizens as part of their offensive.
Kostyantynivka sits close to the battlefield and has been hit on various occasions this year as a result:
It is also about 17 miles (27km) from the city of Bakhmut, where fighting is known to have been intense for some time.
Mr Klimenko shared images on Telegram of what he said were rescue workers sifting through the rubble.
The city of Donetsk has been controlled by Russia’s proxy authorities since 2014, who have repeatedly accused Ukrainian forces of targeting it since the war with Russia began last February.
The attack on Wednesday coincided with a visit by US Secretary of State Antony Blinken to Ukraine’s capital, Kyiv, where he met Ukraine’s Foreign Affairs Minister Dmytro Kuleba.
In the hours before he arrived, sirens wailed across the country and Kyiv’s air defence system was busy intercepting missiles aimed at the capital.
It was assumed Mr Blinken would announce a fresh US aid package for the war-torn country during his trip.