The massive blast rocked central Kabul close to the heavily guarded U.S. Embassy Friday morning.
U.S. military spokeswoman Lieutenant Tamara Lawrence confirmed the attack by phone from the Afghan capital.
"A coalition convoy was the target of a vehicle-borne improvised explosive device near the U.S. Embassy here," she said. "There were two U.S. service members killed and two other U.S. service members wounded in the explosion."
Witnesses say the blast sent shrapnel flying through the air.
Mohammad Sharif, a street sweeper, says he escaped serious injury by ducking behind a nearby statue. He says the explosion knocked him to the ground, and, when he regained his feet, he could see dead and wounded people scattered across the road.
U.S. and British soldiers immediately secured the area.
The attack is the latest in a series of targeted ambushes in the Afghan capital, and comes as the country faces its deadliest year since 2001, when a U.S.-led coalition ousted the hard-line Taleban regime.
In southern Afghanistan, NATO commanders say militants there are also mounting a "stronger than expected" resistance.
NATO recently launched a major offensive in the region, which is the Taleban's traditional stronghold. NATO officials say more than 20 Taleban militants were killed Thursday in the latest fighting.
The deaths bring the total number of insurgents killed so far during the operation to over 300.
The international forces have also suffered casualties this year, including at least 20 battle related deaths.
NATO generals are meeting this week in Poland to discuss plans for troop reinforcements for southern Afghanistan.