The head of the UN team, Maj Gen Robert Mood, was in the convoy, but neither he nor any of the other monitors was hurt.
Eyewitnesses said at least three Syrian soldiers were wounded. The windows of the truck were shattered.
The observers are in Syria as part of the joint UN-Arab League peace plan and began deploying last month.
There are now about 70 monitors in Syria but their presence has had no effect in quelling the violence.
Deraa was where the uprising against the government of President Bashar al-Assad began in March 2011.
An Associated Press reporter travelling in the UN convoy said the explosion blew out the military truck's windows and caused a plume of thick black smoke.
It is not clear who was behind the blast. However, the opposition Syrian National Council is blaming the government, saying the explosion is part of a campaign to drive the UN monitors out of the country.
Maj Gen Mood condemned the blast, saying the observers would remain focused on their mission.
"This is a graphic example of violence that Syrians do not need. It is essential to halt the violence in all its forms," his spokesman told a news conference in Deraa, according to the AFP news agency.
There is constant shooting there, despite a ceasefire between government and opposition forces.
Heavier weapons being fired.
She saw UN observers patrolling the city but said entire neighbourhoods were deserted.
In other developments, UN Middle East envoy Terje Roed-Larsen told the Security Council that arms were being smuggled in both directions between Lebanon and Syria.
"What we see across the region is a dance of death at the brink of the abyss of war," he told reporters later, AFP reported.
Syrian troops fired across the border into Lebanon, killing an elderly woman and wounding her daughter, Lebanese officials said.
The report, quoting residents and a doctor in the town of al-Qaa, says the two women were sitting on the steps of a mosque when they were hit by gunfire on Wednesday morning.
The UN estimates about 26,000 Syrians have fled across the border to Lebanon, most of them in the north.
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On Tuesday, UN-Arab League envoy Kofi Annan told the Security Council that his peace plan could be the "last chance to avoid civil war" in Syria.
He told a closed session that the plan was "not an open-ended commitment" and highlighted continuing violations.
Mr Annan said he was particularly concerned that torture, mass arrests and other human rights violations were "intensifying".
He also told the council that Syrian President Bashar al-Assad bore "primary responsibility" for ending the military campaign.
The UN says at least 9,000 people have died since pro-democracy protests began in March 2011. In February, Syria's government put the death toll at 3,838 - 2,493 civilians and 1,345 security forces personnel.
Syria heavily restricts access to foreign journalists and the reports cannot be independently verified.
Source: BBC News
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