More than 60 were hurt as buildings collapsed in the city centre attack. Almost all those hit were civilians.
Teams spent Wednesday sifting through rubble looking for more wounded.
The Taliban deny they were behind the car bombing. Correspondents say the militants often deny attacks involving civilian casualties.
Kandahar is a stronghold of the Taliban and has seen a number of attacks in 2009.
The explosion took place shortly after the first results were announced in the presidential election.
Officials say it was the deadliest blast in Afghanistan since July 2008, when more than 60 people were killed in a suicide bombing at the Indian embassy in Kabul.
Election attacks
Reports said injured people were still being pulled to safety on Wednesday. "There are some people still trapped in the buildings and we are trying to get them out," said rescue worker Mohammad Darwish, the Associated Press news agency reported.
Dazed locals joined security teams in the search, reports from the scene said.
Among those who lost their lives was a local staff member of the International Committee of the Red Cross.
Taliban spokesman Qari Yousuf said: "We are not responsible for the attack and we condemn it."
He suggested it could be "government propaganda", but correspondents say it is difficult to see who else could be to blame.
Nato spokesman James Appathurai in Brussels said: "The Taliban carry out terrorist attacks on a regular basis. They cannot absolve themselves of responsibility for this attack, either directly or indirectly."
Afghans are currently observing the Muslim month of Ramadan and the explosion took place soon after dusk as they broke their fast.
Some reports said bombs were packed in cars that exploded simultaneously, others that a truck or tanker had been used.
The explosion struck close to the offices of the Kandahar provincial council. Windows across the city were shattered by the force of the blast.
The area has several hotels and offices of non-governmental organisations. A wedding hall was one of the buildings damaged, along with the headquarters of a Japanese construction company.
There have been a series of insurgent attacks across the country as Afghanistan held its presidential election.
The Nato-led International Security Assistance Force (Isaf) said there were more than 400 attacks on election day alone, last Thursday.
Four US soldiers were also killed in fighting on Tuesday, making 2009 the deadliest year for foreign troops in Afghanistan since the 2001 US-led invasion.
Early results in the presidential poll give incumbent Hamid Karzai a slender lead over former foreign minister Abdullah Abdullah.
Fewer than a fifth of votes cast have so far been counted amid allegations of widespread fraud.
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