The source said a militant dressed in a police uniform blew himself up near an administrative building in Dun district, some 15 km (10 miles) south of the city of Kandahar, killing five policemen and three civilians.
"Seven more people, including two policemen, who were in the building at the time, were wounded," the source added.
More than 2,100 Afghan civilians were killed last year, by both extremist groups and the U.S.-led coalition troops, according to official statistics.
The Taliban militant regime was ousted by the U.S.-led invasion in 2001, but the Central Asian state has experienced a rise in violence in recent years, with skirmishes and suicide bomb attacks being reported daily.
The United States plans to send thousands of more troops into the country to try to reverse the Taliban insurgency.
