A second bomb was found and defused near the scene of the blast at Pushkin Square, the Interfax news agency reported.
Moscow Mayor Yuri Luzhkov said seven people were killed and 51 injured in the blast at the start of the evening rush hour.
Immediate suspicion centered on Chechen rebel forces, with police already on alert for possible attacks by Chechen separatists to mark the Aug. 6, 1996, anniversary of the rebels' capture of the Chechen capital of Grozny.
Police said the blast was being treated as a terrorist attack, but there was no immediate claim of responsibility.
Medical workers treated badly injured people lying in the road. Wounded pedestrians, their clothes burned and shredded and covered in blood, staggered out of the passageway as other people ran for cover.
"I thought if I don't get out now I'll die,'' said Maria Korzhenikova, a 19-year-old saleswoman who was working in a cosmetics kiosk in the passageway when the blast hit.
"I was sitting reading a book ... then the lights went out. The door I was supposed to go through was jammed. It was pitch dark, I climbed through a window,'' she said.
She had a shrapnel wound on her shoulder and her face was covered in dust as she wandered around dazed.
The area is one of the busiest in Moscow, adjoining two major streets and three subway stations. The passageway is also lined with kiosks and shops.
Rescue worker Odat Maruan said the bomb was apparently placed haphazardly on the ground in front of a theater ticket kiosk. "They probably put it down and walked away,'' he said.
Mayor Luzhkov said the Chechens could be to blame for the bombing.
"The nature of the crime is obvious â€“ the explosion hit in a place packed with people at rush hour,'' he told reporters at the scene.
Police were placed on heightened alert and ordered to check the many underground passageways around Moscow.
Police and security agents flooded the area after the blast, holding back frightened onlookers as smoke gushed from the passageway.
Traffic above ground was stopped and entrances to the walkway were closed. People streamed out after the blast screaming, many covered head to foot in black soot as smoke filled the multiple passages.
Moscow and other Russian cities have been jittery since a series of apartment bombings last fall killed about 300 people. The Kremlin blamed the bombings on Chechen rebels and sent troops into Chechnya a few weeks later. The Chechens deny the charge.
Earlier Tuesday, anti-organized-crime agents seized large batches of explosives during raids in Moscow and the southern city of Ryazan, the Interior Ministry press service was quoted as saying by the ITAR-Tass news agency.
The press service said the agents had been informed that the explosives were intended for terrorist acts by Chechen separatists.