Fourteen people were rushed to hospital after what police say is a grenade was lobbed into a bar in Nairobi around 1am on Monday.
Anti-terrorism police have sealed off the bar - Mwaura's club - following the blast that comes soon after Kenya's recent offensive into neighbouring Somalia in pursuit of the al Shabaab militia.
Witnesses said two of those removed from the bar after the blast appeared dead, but police told Nation.co.ke they could not confirm any deaths.
Nairobi police boss Antony Kibuchi said he cannot confirm any deaths at this moment. The injured were rushed to the Kenyatta National Hospital (KNH).
Police linked the attack with recent threats made by Somali al Shabaab insurgents.
"Yes, we are linking the grenade attack to the threats that have been issued by Shabaab and that is why I am appealing to city residents to be vigilant and cooperate with our officers," Mr Kibuchi said.
Security in key towns in Kenya has been put on a high alert following Kenya's military operations in Somalia which sparked threats from the al Shabaab group that it will retaliate deep in Kenya.
The US last week put out an alert asking its citizens to avoid venues frequented by foreigners such as shopping malls and popular clubs. (READ: US embassy warns on Kenya attack)
In the warning on Saturday, the US embassy in Nairobi had warned Saturday of an "imminent threat" of attacks possibly targeting foreigners, one week after Kenyan forces crossed into Somalia to hunt down Al Qaeda-linked Shabaab fighters.
The embassy cited "credible information of an imminent threat of terrorist attacks directed at prominent Kenyan facilities and areas where foreigners are known to congregate, such as malls and night clubs."
"We will remain alert and we urge members of the public to remain alert as well," Kibuchi declared. "We have heightened security patrols and enforcement in the city."
The red-painted Mwaura's disco is in the bustling centre of Nairobi, popular with night-clubbers. An AFP journalist said few signs of damage were apparent from the outside of the building, which was guarded by a dozen police.
A nurse at the KNH said six of them suffered "bad injuries on the faces and head" while the rest had "minor injuries on the hands and legs."
At the hospital, victims told of panic in the discotheque as the attack happened.
Lawrence Kioko, chef in a Nairobi Japanese restaurant, had gone out to make a phone call before the incident.
"When I came back I ordered a drink and before I could even take a sip, I heard a loud explosion, and there was a small metal object that fell near my legs, and there was confusion all over the place, everyone was running and I realised there was blood all over my face," Kioko said.
"I have suffered injuries on my face and legs, I even don't know how I came here," Kioko told AFP from his bed in the emergency ward.
Another victim, Kevin Otieno, said: "I had been in the club since midnight and there was no problem at all. There was music and everything seemed OK until when the loud blast occurred. I am told someone threw something inside but I didn't see him.
"I am too lucky to be alive because it was like hell the kind of confusion and the pain I suffered after it occurred."
Jonah Mwangi, who sells matatu (local bus) tickets, said he had gone to purchase cigarettes and decided to have a drink.
"I wish I bought the cigarettes and left, I decided to have a drink and that is when this explosion happened. It was so loud and immediately I started feeling pain and blood splashing at me and we were just trying to get out."
"Because there was one entrance, it took a lot of time because the entrance was so small", he said, bandages all over his face.
Last week, Kenya sent troops across its border with Somalia to hunt Shabaab insurgents it blames for the abductions of a British tourist, a disabled French woman who has since died in captivity and two Spanish aid workers.
The radical Islamist Shabaab, who deny kidnapping foreigners, have repeatedly warned of bloody retaliation.