There was no immediate claim of responsibility for the blast in the southern district of Shopian in the Himalayan region.
Police said they were on guard against outbursts of public anger over the incident, but were awaiting more details.
“People were coming out of the mosque after morning prayers when the blast occurred,” a police officer said.
India is tightening security nationwide ahead of celebrations this weekend to mark independence from Britain.
Attacks on mosques have been almost unknown in the valley, although at times Indian forces have laid siege to militants holed up in shrines.