The blast went off in the busy district of Mecidiyekoy in the European side of the city. The three wounded were hospitalised but were only lightly injured, the report said.
Police threw a security cordon around the area and a helicopter hovered above the scene, it said. There was no indication over who could be behind the blast.
The incident comes with Turkey's largest city on edge after a spate of deadly attacks in the country this year blamed on Kurdish militants and terrorists.
Earlier the US embassy had warned there was a credible threat of attacks to tourist areas in Istanbul and the resort of Antalya.
Suicide bombers who the authorities have said were linked to ISIS terrorists have twice staged deadly attacks in Istanbul this year targeting foreigners.
There also a stepped-up security presence in the city as it prepares to host Muslim leaders from around the world for the Organisation of Islamic Cooperation (OIC) summit next week.
Percussion bombs make a loud noise, causing fear and panic but rarely serious damage or injury.
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