Authorities called the explosion in the terminal at 42nd Street and Eighth Avenue an "attempted terrorist attack" and police identified the suspect as Akayed Ullah, 27.
Authorities evacuated the Port Authority Bus Terminal after the explosion, snarling morning commutes and throwing Manhattan's midtown into disarray.
Ullah is from the Bangladeshi city of Chittagong and is a United States resident, said the country's police chief.
Three people suffered minor injuries and the suspect was seriously injured.
Elrana Peralta, a Greyhound customer service worker at the terminal, said she did not hear the explosion.
Addressing the press on the matter, Mayor Bill de Blasio said the man acted alone and no other incidents have been reported.
He was reportedly carrying a metal pipe bomb that is believed to have detonated prematurely.
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Commuters can be seen covering their heads and running from the scene, as the passage fills with smoke.
Armed police and fire crews reacted in force, with all trains from 42nd Street diverted and roads closed to traffic. A federal law enforcement official told CBS News' Jeff Pegues the device malfunctioned.
According to the NYPD, one person is in custody. As I was making my way toward the outside, I kept getting shoved by cops and there were cops at every entrance blocking and there was police and SWAT everywhere.
John Miles was waiting for a bus to MA when he saw police bounding through the massive facility.
"There was a stampede up the stairs to get out", said Mr Diego Fernandez, one of the commuters at Port Authority.
Ullah had a black cab/limousine driver's license from 2012 to 2015, after which it expired, the New York Taxi and Limousine Commission said.
Policemen stand guard at the site of the blast in NY, the United States, on December 11, 2017.
President Donald Trump was briefed on the explosion, White House spokesman Sarah Huckabee Sanders wrote on Twitter.