A ministry statement said the bombing took place in the Bordj Baji Mokhtar region. It was not known who carried out the attack, the first suicide bombing in Algeria for several years.
The conflict in neighboring Libya and deteriorating security across another of Algeria's borders, in Mali, have both fed concerns of armed militant groups growing more active in the Sahara and Sahel regions of North Africa.
In 2013, an Islamist militant group staged an attack on the Tiguentourine gas processing facility in southern Algeria that killed dozens of people including foreigners.
That was the deadliest spasm of militant violence in Algeria since a 1990s civil war between Islamist groups and the state in which more than 200,000 people died.
Algeria is already wrestling with a major political crisis after a year of mass protests that helped oust the veteran president, but which continue with demonstrators demanding the ruling elite be fully replaced.It also faces economic problems, with declining energy sales contributing to a fall in state revenue and planned cuts in public spending this year.