The suicide attack was the deadliest in the country's capital since newly-elected President Abdrabuh Mansur Hadi pledged to oust Al-Qaeda militants from Yemen's mostly lawless and restive southern and eastern provinces.
So far, no one has claimed responsibility for the blast which according to witnesses was heard across the city, causing panic among residents.
The unidentified bomber detonated his explosives as soldiers from the government's central security forces, commanded by a nephew of former president Ali Abdullah Saleh, rehearsed for an army parade to mark the 22nd anniversary of the unification of north and south Yemen, according to the official.
Yemen's defence minister, Mohammed Nasser Ahmed, was present at the time of the explosion but escaped unharmed, the official added.
Witnesses said human remains were scattered across the site of the blast at Sanaa's Sabeen Square, where the Yemeni government often holds large military parades.
An AFP correspondent said dozens of ambulances rushed to evacuate the dead and wounded, as security forces cordoned off the area.
Monday's attack is Sanaa's most deadly since Hadi took power in February with a pledge to fight Al-Qaeda's growing presence in the county.
Hadi, who was elected in a single-candidate vote as stipulated by the Gulf-sponsored transition deal that forced Saleh's ouster, was expected to give a speech at the military ceremony scheduled for Tuesday.
It remains unclear if the parade will take place as planned.
The suicide bombing comes 10 days into a massive army offensive against Al-Qaeda in Yemen's restive southern Abyan province, where the jihadists have seized control of a string of towns and cities in attacks launched since May last year.
Since the offensive began, 213 people have been killed, according to a tally compiled by AFP, including 147 Al-Qaeda fighters, 31 military personnel, 18 local militiamen and 17 civilians.
The offensive followed days after the White House announced that a plot by Al-Qaeda in the Arabian Peninsula (AQAP) to blow up a US airliner had been foiled.
A senior US official told the New York Times that a bomb for the would-be attack was sewn into "custom fit" underwear that would have been difficult to detect even in a careful pat-down at an airport.
It said a double agent spent weeks with AQAP before handing over information allowing the United States to launch a drone strike on May 6 that killed Fahd al-Quso, a senior figure wanted for the 2000 bombing of the USS Cole in Yemen.
Quso's name figured on an FBI list of most wanted terrorists, along with a reward of up to $5 million for information leading to his arrest.