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Hundreds of people were packed into the multiplex theatre in the town of Ludhiana, watching a romance.
Eyewitnesses said there was a stampede as people tried to flee the cinema following the suspected bomb attack.
India has been on nationwide alert since an attack last Thursday on a famous Muslim shrine in the city of Ajmer, in Rajasthan, killed two people.
Labourers
Police suspect a single bomb placed in the first several rows of seats in the cinema caused Sunday's explosion.
"It is a terror act. We are trying to find out the exact nature of explosives used," a senior police official told the AFP news agency.
Many of those inside were poor, migrant labourers enjoying a Bollywood movie.
They were watching "Janam Janam Ke Saath" or "Together Through Several Lifetimes", according to the Press Trust of India news agency.
Last Thursday's attack in Ajmer happened as thousands of worshippers gathered for prayers during Ramadan.
So far there have been no arrests in connection with either incident.
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