The FBI Joint Terrorism Task Force was mobilised to investigate the incident, according to New York Governor Kathy Hochul.
Two people in the vehicle were killed in the blast on Wednesday and one border patrol official was injured, the Fox News Channel reported, citing unnamed sources. CNN also reported that two people had died.
Reuters was unable to immediately verify these reports.
Official details of the incident were murky. The Niagara Gazette newspaper, citing law enforcement sources, said the car sped onto the bridge plaza, went through a fence separating the inbound lanes from the outbound lanes, and toward the inspection lanes, where it exploded.
The Rainbow Bridge and the three other border crossings between western New York and Canada - the Peace Bridge, the Lewiston-Queenston Bridge and the Whirlpool Bridge - were shut down indefinitely as a precaution, the New York governor's office said.
The explosion was under investigation by agents from the FBI field office in Buffalo, New York.
The three US-Canada crossings along the Niagara River separating southern Ontario and New York state are among the busiest in the world.
Security measures were escalated at airports and railways in the region managed by the Niagara-Frontier Transit Authority, the governor's office said.
"This is obviously a very serious situation. The government of Canada is taking this situation extremely seriously," Public Safety Minister Dominic LeBlanc told reporters in Ottawa.
"We are in close contact with American authorities. I will be speaking with the US homeland security secretary shortly.," LeBlanc said.
The explosion was under investigation by agents from the FBI field office in Buffalo, New York, the agency in a statement on X.
"The FBI is coordinating with our local, state and federal law enforcement partners in this investigation," the FBI statement said.
"As this situation is very fluid, that's all we can say at this time."
Hochul issued a separate statement on X saying, New York state police, at her direction was "actively working with the FBI Joint Terrorism Task Force to monitor all points of entry to New York".
I've been briefed on the incident on the Rainbow Bridge in Niagara Falls and we are closely monitoring the situation. State agencies are on site and ready to assist.— Governor Kathy Hochul (@GovKathyHochul) November 22, 2023
Law enforcement teams in Canada also were "actively engaged in assessing the situation," Ontario Premier Doug Ford said on X.
Border agency officials in the US had no immediate comment, while their Canadian counterparts did not immediately respond to a request for comment.
Representatives for the US State Department also did not immediately respond to a request for comment on the reported border closures.
The White House was closely monitoring the situation, as well, a spokesperson said.
