The blast occurred in a dirt parking lot about 100 metres from the depot, which was crowded with morning rush-hour commuters.
Witnesses said two security officers had halted the bomber from nearing the waiting travellers, preventing a much deadlier attack.
The two guards were critically injured by the explosion in which the bomber blew himself up.
Another 48 people were treated for shock, police spokesman Avi Zelba said.
The bombing is the third since Israel and the Palestinians declared a ceasefire in February, and the first since Jewish settlements were cleared in the Gaza Strip last week.
The attack has been condemned by Palestinian leader Mahmoud Abbas as a ‘terrorist operation’.
It came just minutes after he made a pledge to indefinitely maintain the ceasefire.
Israeli Foreign Minister Silvan Shalom lashed out, saying the bombing was proof “once again (of) how little is being done by the Palestinians to stop terrorism against us. We will not tolerate a continuation of a campaign of violence against our people.”
According to the Agence France Presse (AFP) news service, the Palestinian militant groups, Al-Aqsa Martyrs’ Brigades, which is linked to President Abbas’s Fatah faction, and the Al-Quds Brigades of Islamic Jihad claimed responsibility for the bombing.
AFP said a caller made an anonymous phone call stating the attack “was carried out in the name of Al-Aqsa and Al-Quds Brigades by Alaa Zaakik, 25, from Beit Omar.”
However, AFP later revealed that information was contested by the Zaakik family, who said he had been arrested for questioning by Israeli forces at the time.
The Al-Aqsa Martyrs’ Brigades, along with Hamas and Islamic Jihad, have vowed revenge for a fatal raid carried out by Israeli forces last week in which four Fatah activists and a local Islamic Jihad leader were killed.
Palestinian negotiator Saeb Erekat, denounced the blast and urged a return to the ceasefire.
“We… call upon all to make a maximum effort in order to maintain the truce and quiet.” Mr Erekat said.
“Violence will bring more violence, and what Israelis and Palestinians need today is more peace and not violence.”
Meanwhile, Israeli cabinet ministers have taken a key step towards ending Israel’s 38-year-old military presence in Gaza.
By a vote of 18-2, they approved the deployment of 750 Egyptian border police to the Egyptian side of the Gaza frontier ahead of Israel’s withdrawal.
Last week, 8,500 Jewish settlers were removed from the Gaza Strip in a pullout that is expected to be finalised by early October.