The Taliban has claimed responsibility of the attack describing the blast as a truck-laden suicide bombing at the gate of the North Gate guesthouse, CNN reported.
However, no casualties have been reported so far.
"The massive explosion struck the guesthouse frequented by foreign contractors and international staff of foreign agencies at around 1.25 a.m. The heavily guarded complex is located in Pul-e-Charkhi area along Jalalabad road in eastern edge of the city," a security source told Xinhua news agency.
"The area is not a populated residential district. But there is still fear of casualties as many people were inside the building before the attack. So far, we have no more details, but we will try to get more information," the source added.
Khaama Press quoted police saying that at least four militants launched a gun attack following the massive blast that resulted into power outage in the city.
The same hotel came under an attack in July 2013 when five insurgents blasted the perimeter wall open with a truck bomb and made their way into the compound, Tolo News reported.
Five security guards were killed before the attackers were gunned down.
Kabul has repeatedly been the scene of deadly attacks in recent months.
On July 23, at least 80 people were killed and over 300 others injured when the Islamic State attacked a Hazara (ethnic Shia minority group) gathering.
In April, the Taliban launched an attack on the intelligence agencies in the capital which killed 64.
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