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The attack occurred at a hotel in Hagadera in the Dadaab refugee camp. North Eastern Provincial Police Commander Leo Nyongesa, said the blast had wounded two people who had been rushed to hospital.
"A grenade was thrown at a restaurant, it exploded. So far two people who sustained serious have been taken to hospital,\"he told Reuters.
The Kenya Red Cross said on its Twitter feed that three people were wounded and it was responding to an explosion at the hotel.
Dadaab is home to some 460,000 people, most of them Somalis who have fled two decades of conflict and famine.
More than 10 people have been killed in a series of attacks in Nairobi and Mombasa since Kenyan troops launched their incursion into southern Somalia to crush Islamist al Shabaab militants late last year.
Nairobi blames the militants for a wave of kidnappings of foreigners on Kenyan soil that have threatened the country\
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