The powerful explosion in the eastern Afghan city, which also wounded six people including children, left the area littered with charred debris, shattered glass and mangled vehicles.
It is the latest in a series of assaults on Western-backed forces as the Taliban step up their annual spring offensive and the insurgency expands more than 15 years after they were ousted from power in a US-led invasion.
"A suicide car bomb in Khost province has killed 13 people," said interior ministry spokesman Najib Danish. "The target was a public bus station which was hit by the bombing. The victims were in civilian clothes and it is difficult to verify their identities."
But provincial police chief Faizullah Ghairat said members of the elite Khost Provincial Force (KPF) -- known to be paid and equipped by the American CIA -- were the target of the attack.
"The bombing took place early morning when KPF members were heading to work," Ghairat told AFP. "But most of the victims are civilians."
The KPF, estimated to have around 4,000 fighters, are believed to operate a shadow war against the Taliban in a province that borders Pakistan and are accused of torture and extrajudicial killings.
The brazen attack, claimed by the Taliban on their website, comes just a day after at least 15 Afghan soldiers were killed when insurgents attacked their base in Kandahar, in the third major assault this week on the military in the southern province.
The attack in Shah Wali Kot district followed insurgent raids earlier this week on military bases in the same area and Maiwand district, bringing the death toll among Afghan troops in Kandahar to around 60.
The battlefield losses mark a stinging blow for NATO-backed Afghan forces and have raised concerns about their capacity to beat back the resurgent Taliban.
Afghan forces are beset by unprecedented casualties and blamed for corruption, desertion and "ghost soldiers" who exist on the payroll but whose salaries are usurped by fraudulent commanders.
During another deadly Taliban attack on security outposts in southern Zabul province on Sunday, local officials made desperate calls to Afghan television stations to seek attention because they were unable to contact senior authorities for help.
The pleas for attention, a major embarrassment for the Western-backed government, highlighted the disarray in security ranks.
The United Nations this week called on all parties of the conflict for a halt in fighting during the Muslim fasting month of Ramadan.
That has prompted no response from the Taliban, who launched their annual spring offensive in late April, heralding a surge in fighting as the US tries to craft a new Afghan strategy.
"Terrorists, on the first day of Ramadan, conducted an attack in Khost that martyred a number of countrymen," the Afghan presidential office said in a statement.
"The terrorists do not value any religious and holy days, committing a war crime and an unforgivable crime."
US Defense Secretary Jim Mattis last month warned of "another tough year" for security forces in Afghanistan.
The United States and several NATO allies are considering sending thousands more troops to break the stalemate against the resurgent terrorists.