The explosive device was detonated shortly after Hamdallah and his convoy passed through the Beit Hanoun checkpoint in northern Gaza, reported Al Jazeera.
Hamdallah was rescued unharmed.
The Palestinian Authority intelligence chief Majed Faraj was also a part of the convoy.
Palestinian president Mahmoud Abbas of the ruling Fatah party termed it as 'terrorist attack' while blaming the ruling party of Gaza Hamas.
Hamas and Fatah had been opposing each other over a border dispute post death of Yasser Arafat, former chairman of Palestine Liberation Organisation.
Iyad al-Buzom, Gaza's interior ministry spokesperson, said the act of placing blame "has a political dimension", Al Jazeera quoted.
"Here in Gaza, we take all the security precautions to welcome all the convoys and delegations and particularly the prime minister as he entered Gaza," he said.
He added that "several suspects were arrested a short while ago," and that an investigation "to find out who was behind the explosion" is underway. (ANI)