In a statement posted on its Telegram channels, the group claimed responsibility for the attack in Marawi City, which was carried out using an improvised explosive device.
Earlier on Sunday, before the group claimed responsibility for the attack, Philippine President Ferdinand Marcos Jr. denounced the "reckless and heinous acts committed by foreign terrorists."
Police and the military have stepped up security in the south of the country and around the capital Manila.
Philippine Defense Secretary Gilberto Teodoro told a news conference that law enforcement operations "will continue unabated to bring the perpetrators of this terrorist activity to justice."
Teodoro said there were "strong indications of a foreign element" in the blast, declining to provide further details.
The defense minister said the blast in Marawi, the capital of Lanao del Sur province, followed military operations targeting local pro-Islamic State groups in the southern Philippines, including an operation on Sunday in Lanao del Sur, during which the leader of the group's Mauti group was killed.
Armed forces chief Romeo Brauner told the news conference: "It is likely that what happened this morning was a revenge attack."
Maote's group captured Marawi in May 2017, seeking to turn it into an Islamic State "province" in Southeast Asia.
More than a thousand people, including civilians, have been killed in the five-month battle between militants and Philippine forces.