The woman went into the police station in the Sultanahmet district and told the police in English she had lost her wallet before setting off her charge, governor Vasip Sahin said on Turkish television.
One policeman was badly wounded and another lightly wounded, he added. Previous reports had said the attack was caused by a hand grenade.
“She approached the police at around 5:00 pm (1500 GMT), saying in English: ‘I have lost my wallet’. That’s all I can say. We are trying to identify the attacker,” said Sahin.
“Right now one police officer is in hospital in a critical condition and another is lightly injured.
“The female bomber lost her life. She has staged the attacked by detonating the bomb on her.”
The Sultanahmet district, which is the home of world famous attractions including the Blue Mosque and Aga Sophia museum, is visited by thousands of Turkish and foreign tourists every day.
Emergency services rushed to the scene and the city tram line that goes through the district was halted.
Officials said there was so far no indication of the nationality or identity of the female suicide bomber.
The attack came five days after a member of an outlawed Marxist group attacked police on guard outside the Ottoman-era Dolmabahce palace in Istanbul on the Bosphorus.
The man, named as Firat Ozcelik, hurled two grenades at the police honour guard on duty outside the palace but they failed to explode.
The Revolutionary People’s Liberation Party–Front (DHKP-C) said it was behind the attack outside the Dolmabahce palace, which houses the Istanbul offices of the Turkish prime minister. -AFP