The Afghan president's American bodyguards opened fire in response to the shooting in Kandahar, and three people were killed, including one who was wearing an Afghan military uniform. Their bullet-riddled bodies could be seen outside the grounds of the mansion in a pool of blood.
In Washington, a Pentagon official said an American bodyguard in Karzai's security detail was wounded but that he didn't know how serious the wound was.
"Terrorists are behind both attacks, there is no doubt about it. And terrorists in this region are led by Osama and his associates," said Afghan Foreign Minister Abdullah.
The attack in Kandahar occurred as the convoy carrying Karzai and Kandahar Gov. Gul Agha Sherzai was leaving the governor's mansion. Sherzai, who was grazed in the neck, was released after being treated at the U.S. air base here.
The violence was the most serious assault against the Afghan leadership since it took power following the collapse of the Taliban last year. It occurred less than a week before the anniversary of the Sept. 11 terror attacks and four days ahead of the anniversary of the assassination of military leader Ahmed Shah Massood, who was killed by al Qaeda.
Massood's Tajik-controlled northern alliance, which had battled the Taliban for five years, became the major power in Karzai's government. It is opposed by Pashtuns, who dominate the south, where Thursday's assassination attempt took place.
The Pashtuns, the largest ethnic community and the Taliban's former political base, have grown increasingly frustrated by the Tajiks who dominate the new administration.
Karzai was in Kandahar, the former spiritual headquarters of the Taliban, to attend a wedding celebration for his youngest brother, Ahmed Wali Karzai.
"I was just outside the gate when I heard the gunshots," Sherzai's security chief Dur Mohammed said. "The Americans opened fire on three people, and they were killed."
After the attack, Karzai returned to the governor's guesthouse, where he is staying, and said he was fine.
"He says he is safe and sound, and has come to expect these things," said BBC reporter Lyse Doucet, who was with the president at the time of the attack.
She said thousands of people were pressing forward toward the president and one Afghan boy approached his vehicle. As Karzai leaned out to shake hands with the boy, "an Afghan in uniform also came forward and fired two rounds into the president's vehicle."
Just before the assassination attempt, Karzai commented to The Associated Press about the bombing in Kabul:
"It's very sad. It's a horrible thing to happen to our people." Asked who was responsible: "I'm sure terrorists."
U.S. President George W. Bush, informed of the attack in Kandahar by an aide as he waited on the tarmac in Louisville, Kentucky, expressed relief that Karzai was not hurt.
U.N. Secretary-General Kofi Annan expressed shock at Thursday's assassination attempt on Karzai and predicted the attack would bolster efforts to improve security in Afghanistan.
"The secretary-general notes that today's terrorist attacks took place in a climate of continuing insecurity in Afghanistan," said U.N. chief spokesman Fred Eckhard.
"At the same time he is confident that these senseless attacks will only strengthen the resolve of the international community and the legitimate Afghan authorities to bring security and stability to Afghanistan," he said.
Karzai, whose country is being rebuilt under U.N. guidance, is expected to travel to U.N. headquarters next week to attend the start of the 57th session of the General Assembly, and to address the assembly on Sept. 20.
Due to continuing insecurity in the central Asian nation after a U.S.-led military campaign toppled its Taliban leaders, Annan and Karzai have both called for an expansion of the International Security Assistance Force whose operations are now confined solely to the Kabul area.
The United States has until recently opposed dispatching soldiers from the force to other key Afghan cities but is now considering doing so. It is unclear, however, whether those nations with sufficiently skilled soldiers will come up with the needed troops.
Thursday's assassination attempt occurred shortly after a car bomb rocked a busy market area in the center of Kabul on Thursday, the bloodiest attack in the Afghan capital since the fall of the Taliban. As CBS News Correspondent Lara Logan reports, it revealed the devious and evil nature of terrorist attacks.
First, a small bomb on a bicycle exploded in a busy street.
In CBS News' exclusive video, an amateur cameraman was filming a curious crowd, including women and children, gathered around the debris.
What the crowd didn't realize was that another much bigger bomb was planted in the row of cars nearby strategically placed and timed to explode when as many people as possible were lured to the scene, including security forces who had rushed to the scene.
Then the larger car bomb went off. The cameraman was knocked off his feet - but keeps rolling while cries of the wounded fill the air.
As the smoke clears, stunned survivors beg for help. There are bodies scattered across the street and an injured soldier tries to drag himself away from the cars which are still burning. Lying next to him is the body of a child he'd tried to shoo away from the scene just before the blast.
Within minutes, rescuers arrived and put out the flames.
"This bomb was inside a taxi," said police spokesman Dul Aqa. "It was a very, very strong explosion."
International peacekeepers came to help the Afghans search for clues. So far there are two main suspects. The obvious one is Osama bin Laden. The other is a fundamentalist warlord, Gulbeddin Hekmatyar.
Earlier this week, Hekmatyar issued a call for jihad, or holy war, to drive U.S. and foreign troops including international peacekeepers from Afghanistan. Some officials have speculated that he may have formed an alliance with remaining al Qaeda and Taliban leaders, although no clear evidence of this has surfaced.
"The U.S. forces take the thieving soldiers of the northern alliance to the Pashtun majority areas to have them fight Pashtun Muslims. The search operations in the houses of Pashtuns have been assisted by the northern alliance forces in an attempt to sow the seeds of hatred and enmity among the various ethnic groups of Afghanistan," Hekmatyar said.
Kabul Police Chief Basir Salangi accused al Qaeda of orchestrating the explosion.
"This is the work of al Qaeda," he said.
The blast, which police said killed 10 and reportedly injured 65, occurred in one of the most congested areas of the city on a day when many residents do their shopping before Friday's Muslim prayer day.