"He opened the door of his vehicle outside his home and the bomb went off", a source from Sidon said.
A blast destroyed a auto in the southern Lebanese city of Sidon, injuring a member of the Palestinian group Hamas, Al-Manar TV reported.
Mohamad Hamdan, also known as Abou Hamza, was identified as the target of the bombing.
A leader of the Palestinian Fatah movement in Lebanon said Hamdan was involved in operations in Israel.
"Initial indications point to Zionist [Israeli] fingers behind this criminal act", Hamas said without further details.
Lebanese security forces imposed a security cordon around the site of the blast.
Conflicting reports emerged about the extent of Hamdan's injuries.
Military and medical sources told AFP that a Hamas official was wounded, while Al Arabiya reported that Abu Hamza Hamdan was killed in the attack.
The most densely-populated of these camps is Ain el-Hilweh, which lies near Sidon and is home to some 61,000 Palestinians, including 6,000 who have fled the war in neighbouring Syria.