The bombers detonated their explosives to avoid being captured by Turkish police in the southeastern city near the Syrian border, the state-run news agency Anadolu reported.
The blast took place shortly after Turkish-backed rebels captured the northern Syrian town of Dabiq from the IS group, dealing a major symbolic blow to the jihadists.
Local governor Ali Yerlikaya said three police officers were killed and another eight people wounded, four of them Syrians, Anadolu reported.
Acting on a tip-off, special police used armoured vehicles to block the road where the suspected IS jihadists were holed up in a house, Anadolu reported.
Witnesses told private NTV television they heard sound of gunfire and clashes in the area, which is mostly populated by university students.
Video footage released by the private Dogan news agency showed several suspects with their hands tied behind their backs as they were taken to a police car.
Yerlikaya said the raid took place after Turkish authorities gathered intelligence about a possible suicide bomb attack by a suspected IS sleeper cell in Gaziantep against an Alevi cultural association.
Police confiscated computers and hard disks from the house.
Second operation?
Police launched a hunt for suspects after the suicide blast, and raided a bakery where one militant was thought to be hiding.
NTV television reported the sound of an explosion and clashes, adding that many ambulances and fire engire teams were dispatched to the area.
Gaziantep, a major city lying just 60 kilometres (37 miles) north of the Syrian border, has become a hub for Syrians fleeing the civil war.
Since the summer of 2015, Turkey has suffered a string of attacks in Gaziantep and elsewhere blamed on IS jihadists and Kurdish militants.
In August, a deadly suicide bombing at a Kurdish wedding in the city killed 57 people, 34 of them children. The attack was blamed on IS jihadists.
In September, the United States warned of the risk of a terror attack in Gaziantep on businesses frequented by Westerners, including the popular coffee chain Starbucks.
At the time, the US embassy in Ankara warned its citizens that Turkish police were investigating a possible "terror cell" in Gaziantep.
Turkish authorities acknowledge that IS jihadists have built up a presence in the southeastern city with the aim of staging attacks, and Sunday's raid was part of a wider crackdown on sleeper cells across the country.
Yerlikaya said Turkey "will continue its fight against all terror groups including Daesh", using an Arabic acronym for IS.
Turkey launched an unprecedented operation inside Syria on August 24, backing up opposition fighters, with an ultimate goal of cleansing its border of IS jihadists and stopping the advance of Syrian Kurdish militia forces which Ankara vehemently opposes.
President Recep Tayyip Erdogan has voiced Turkey's willingness to become involved in a coalition operation to recapture the key Iraqi city of Mosul from IS jihadists.
Turkey is still reeling from an attempted July 15 coup blamed on US-based Islamic preacher Fethullah Gulen that has been followed by a relentless purge of his supporters from all state institutions.
Kurdish militants have also staged a number of attacks.
Adherents of the Alevi branch of Islam are known for their hardline opposition to the Islamic-rooted ruling Justice and Development Party (AKP) co-founded by Erdogan.
