The target of the attack, Brig. Gen. Francois Hajj, a Maronite Catholic and head of army operations, was considered a leading contender to succeed the head of the military, Gen. Michel Suleiman, if Suleiman was elected president, the Associated Press reported.
Hajj, 55, also led a major military campaign against Islamic militants over the summer.
"General Hajj played a big role in anti-terror operations and his murder could be revenge by the terrorists," a senior Lebanese army general told Time magazine.
Security sources told Reuters that 77 pounds of explosives packed into an olive-green BMW car were detonated about 7:10 a.m. local time by remote control in Baabda, an eastern suburb of Beirut, as Hajj's four-wheel-drive vehicle drove past on a mountainous road that the general regularly took to work.
No group claimed responsibility for Hajj's killing. His death marks the ninth fatality in a string of assassinations of journalists and anti-Syrian politicians that began with the 2005 killing of ex-premier Rafik al-Hariri, according to Reuters.
Some Lebanese politicians accuse Syria of carrying out the killings. Damascus has denied any involvement.
Syrian Foreign Minister Walid al-Moualem denounced the "criminal attack" on Hajj, saying: "We condemn any action that threatens Lebanon."
The blast set other cars on fire and left a hole six feet wide in the ground. Security officials were scouring the valley at the side of the road on Wednesday afternoon for more body remains.
"I saw one guy wounded and blood coming down his face," said Tony Deeb, who works at a nearby supermarket, according to the New York Times. "They put him in the car and took him to hospital. Cars were on fire. Smoke was everywhere. People were screaming."
The attack heightened tension in Lebanon where rival leaders are embroiled in a struggle over the presidency that has fuelled the biggest political crisis since the 1975-1990 civil war.
Political divisions have paralyzed the government and prevented the election of a president, leaving the post empty since Nov. 23. Under Lebanon's sectarian division of political posts, the president must be a Maronite, like the army commander.
Almost all of the country's important politicians are confined to their apartments, barricaded in family compounds, or simply hiding, the Times reported.
Lebanese politicians from the Western-backed ruling coalition and the Hezbollah-led opposition denounced the attack, as did the United States, France, Germany and Iran.
The blast is the first such attack against the Lebanese army, which has remained neutral in Lebanon's yearlong political crisis and is widely seen as the only force that can hold the country together amid the bitter infighting between parliament's rival factions.
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