The explosion, which came during morning rush hour on a busy road near the US embassy and NATO headquarters, killed “mostly” civilians, an interior ministry spokesman told AFP without giving a breakdown.
NATO said three coalition service members had received “non-life threatening wounds” in the attack.
“[They] are in stable condition, and are currently being treated at coalition medical facilities,” a spokesman for US Forces-Afghanistan said, without confirming their nationalities.
IS claimed responsibility for the blast via its Amaq propaganda agency, saying the eight dead were all American soldiers. The militants are known to exaggerate their claims.
The attack comes three weeks after the US dropped its largest non-nuclear bomb on the jihadist group’s hideous in eastern Afghanistan.
NATO commander in Afghanistan General John Nicholson said the strike, which triggered global shockwaves, showed there was “no space” for IS in the war-torn country.
Monday’s attack comes as the US seeks to craft a new strategy in Afghanistan and NATO mulls boosting troop levels as they face a “stalemate” against the resurgent Taliban.
The blast, which IS said was a suicide car bomb and NATO said was an improvised explosive device (IED), damaged two of the heavily armoured vehicles in the convoy and left a small crater in the road, witnesses and an AFP photographer said.
MRAP (Mine Resistant Ambush Protected) vehicles, which are designed to withstand large explosions, are routinely used by international forces moving around Kabul.
At least three civilian cars were also damaged, with one ablaze, while windows were shattered up to several hundred metres away. Firefighters and ambulances rushed stunned survivors to hospital.
Nicholson has said the US decision to drop the GBU-43/B Massive Ordnance Air Blast on IS hideouts in Nangarhar province last month was a “very clear message” to the group: “If they come to Afghanistan they will be destroyed”.
Some observers have condemned the move against a militant group that is not considered as big a threat to Afghanistan as the Taliban. Others suggested it would boost the Taliban, who have been in a turf war with IS in Nangarhar.
The weapon, dubbed the “Mother of All Bombs”, killed at least 95 jihadists, according to the Afghan defence ministry, but fighting in the area has continued.
Last week, two US troops were killed in an operation against IS near where the bomb was dropped. The Pentagon has said it is investigating if they were killed by friendly fire.
Watch: Eight dead in Kabul blast
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Pentagon chief Jim Mattis warned of “another tough year” for both foreign troops and local forces in Afghanistan when he visited Kabul last month.
He would not be drawn on calls by Nicholson for a “few thousand” more troops to break the “stalemate” against the Taliban insurgents.
But NATO chief Jens Stoltenberg told a German newspaper Sunday that the 28-nation alliance was considering boosting its troop strength once more given the “challenging” security situation.
The US has around 8400 troops in the country with about another 5000 from NATO allies. Most are taking part in NATO’s train, assist and advise mission, though some are also carrying out counter-terror missions targeting IS and Al-Qaeda.
First emerging in 2015, ISIS-K overran large parts of Nangarhar and Kunar provinces, near the Pakistan border, but their part in the Afghan conflict had been largely overshadowed by the operations against the Taliban.
Captain Bill Salvin, spokesman for US Forces-Afghanistan, said the local IS presence peaked at between 2500 to 3000 but that defections and recent battlefield losses had reduced their number to a maximum of 800.
“We have a very good chance of destroying them in 2017,” Salvin told AFP recently.
Afghan forces have been straining to beat back the Taliban insurgents since US-led NATO troops ended their combat mission in December 2014.
With more than one third of Afghanistan outside of government control, civilians also continue to bear a heavy brunt, with thousands killed and wounded each year and children paying an increasingly disproportionate price, according to UN figures.