The force of the blast left almost no trace of the trolleybus, which was packed with early morning commuters, and also blew out windows of nearby houses, state television said.
The new blast will further heighten fears about security at the Winter Olympic Games which are due to open on February 7 in the Black Sea resort of Sochi which lies 690 kilometres (425 miles) southwest of Volgograd.
"According to initial information, 10 people were killed and 10 were wounded" in the explosion, the spokeswoman of the local branch of the emergencies ministry Irina Gogoleva told the Interfax news agency.
Russian investigators have opened a criminal probe into a suspected act of terror as well as the illegal carrying of weapons, Investigative Committee spokesman Vladimir Markin told Russian news agencies.
Another source told the ITAR-TASS news agency that the blast could have been caused by a suicide bomber but this has not been confirmed.
Russian President Vladimir Putin has already been informed of the new attack by the Federal Security Service (FSB) chief Mikhail Bortnikov, said Kremlin spokesman Dmitry Peskov.
A suicide bomber killed 17 people Sunday in the attack on the train station of Volgograd, heightening security fears just six weeks before the Sochi Olympic Games. The death toll from Sunday's attack rose to 17 from 16 overnight after another victim died in hospital of his wounds, the health ministry said.
But the Volgograd blasts will be a particular concern to the authorities as the bomber struck a city of more than one million people in the Russian heartland.
Sunday's blast in Volgograd was the deadliest in Russia since a suicide bombing at Moscow's Domodedovo airport killed 37 people in January 2011.
Investigators said the suicide bomber -- believed to be a woman -- set off her charge after being stopped by a police officer at the metal detectors of the central entrance to the station when it was packed with people travelling to celebrate the New Year.
Russia's interior ministry said it was immediately stepping up security at all the nation's main train stations and airports. The Volgograd government also introduced a heightened terror alert level in the region for the coming 15 days.
Female suicide bombers are often referred to in Russia as "black widows" -- women who seek to avenge the deaths of their family members in the fighting by targeting Russian civilians.
Source: AFP
Female suicide bombers have repeatedly struck Russian targets during Putin's 14-year rule, including twin attacks that killed more than 90 people on passenger jets in 2004.
