Three bombers drove in a car towards the consulate and detonated explosives, killing 12, including eight children, and injuring 24 others. The dead included the bombers.
The explosion, which created a large crater, occurred at a security check post just ahead of the consulate and all Indian personnel were safe. There was no major damage to the consulate, official sources said in New Delhi.
The Taliban denied any hand in the attack, in which the ISI-backed Haqqani network is a suspect. The Indian
Embassy in Kabul has been attacked by the network twice - in 2008 and 2009 - killing scores of people.
Today's attack took place in the backdrop of threats of possible terror attacks on Indian diplomats and other assets in Afghanistan. A security team was dispatched from Delhi to Kabul last week to assess the threats.
Afghan officials said one attacker detonated the explosives-laden vehicle while the other two, wearing suicide vests, were gunned down by security forces in an exchange of fire while trying to target the Indian Consulate.
Three Afghan policemen were among the injured.
Nangarhar province police chief Gen Sharif Amin said most of the victims were children attending religious classes at a nearby mosque.
"At least eight children were killed," Amin was quoted as saying by Tolo News channel.
Amin confirmed that the consulate was the intended target of the blast. Police in Jalalabad were on alert for such an attack, he said.
The attack happened when many people, including women, were queueing up near the consulate to apply for visas.
Gunshots were heard in the area for nearly an hour, local media reported.
The explosion shook the neighbourhood and blew out windows of nearby homes. It also damaged the mosque and several houses and shops.
Humayoun Zahir, director of Jalalabad Civil Hospital, said the facility received six bodies and 22 injured from the site, where the Pakistani consulate is also located.
In 2008, a car bomb attack on the Indian Embassy in Kabul killed over 60 people and suicide attacks on two guesthouses in 2010 killed 16 people, including seven Indians.