Local publication Nordbayern.de reported the explosion occured in front of Eugene's Winebar, near the entrance to the open air festival.
"It is almost a miracle that no more people were harmed here," a report read.
Ansbach Mayor Karda Seidel confirmed the cause of the incident in the city centre was an intentional explosion.
"This is not a gas explosion, it was caused by a bomb," Seidel told Sputnik News.
Germany's Interior Minister
Ansbach police said in a statement early Monday that just after 10pm. Sunday they were alerted to an explosion in the city centre.
They said that "a man, according to our current knowledge the perpetrator, died" in the blast.
Ansbach police could not immediately be reached for further comment. The perpetrator of the attack is currently unknown.
Ansbach is a town of approximately 40,000 people near Nuremberg, in the German state of Bavaria.
The region is in a state of shock, already affected by the Friday attack where an 18-year-old executed a horrific shooting rampage that left 10 people dead in Munich.
This morning, a Syrian asylum-seeker was arrested after killing a woman with a machete in the southwest German city of Reutlingen.
Then last week, a 18-year-old Afghan asylum seeker wounded five people in an axe-and-knife rampage near Wuerzburg, for which Islamic State claimed responsibility.
It comes just days after European Union's law enforcement agency warned the biggest threat Europe currently faces are those attacks carried out on home soil by foreign fighters and lone wolves.
In Europol's EU Terrorism Situation and Trend Report 2016 it said there were 211 attacks, which took place last year, an increase of 38 per cent from 2013. This attack figure includes those which have failed or been foiled.
Europol director Rob Wainwright warned that Europe currently faces a "shifting and increasing range of threats emanating from jihadist groups and individuals" while the threat posed by other jihadist militant groups has not diminished.