The coalition has confirmed it suffered casualties, but has not yet released details.
The Syrian Observatory for Human Rights (SOHR) said US-backed coalition forces were the intended target.
Manbij Military Council spokesman Shervan Dervish confirmed the explosion took place on Wednesday afternoon.
Terror hits the safe city of Manbij.
— Shervan Derwish (@shervanderwish) January 16, 2019
An explosion in Manbij's busy market steert, initial reports of casualties.
SOHR says “at least” 19 people were killed or injured in the blast in the Al-Ummara restaurant.
Four US forces were killed and three wounded in the blast, Reuters reported citing an unnamed American official.
The coalition confirmed "US service members were killed during an explosion while conducting a routine patrol in Syria today."
But it has not given further details.
The coalition frequently carries out patrols in the Manbij area. US military leaders and visiting politicians also often tour the market in the city when they visit.
Seven civilians were also killed and 10 more were injured, according to SOHR. The number is likely to rise.
According to sources who spoke to Hawar, the Rojava administration’s de facto official news agency, four US soldiers were evacuated by helicopter. One MMC fighter was also reported killed.
Riam Dalati, a BBC producer, shared footage on Twitter showing a US helicopter taking off near the blast site.
US forces were pictured at the scene of the suicide attack.
Photo: ANHA/AFP.
ISIS issued a statement via its Amaq media site claiming responsibility.
"A suicide attack carried out with explosives vest hit an international coalition patrol in the city of Manbij," it stated.
Not long after the coalition confirmed American soldiers had been killed in the attack, US Vice President Mike Pence repeated a claim from the president that ISIS was defeated.
"The caliphate has crumbled and ISIS has been defeated," Pence said at a State Department conference.
"We'll stay in the region and we'll stay in the fight to ensure that ISIS does not rear its ugly head again. We will protect the gains that our soldiers and our coalition partners have secured," he said.
Turkish President Recep Tayyip Erdogan, who has threatened to launch an attack on Kurdish forces in Manbij and east of the Euphrates as the US prepares to withdraw its forces from the country, said the blast on Wednesday could have been an attempt to stop the US exit.
Updated 8.02 pm
