Officials are saying that it's not terror related but that it could have been caused by an electrical transformer or a steam pipe that blew. From WCBSTV:

A powerful underground explosion near Grand Central Terminal sent a massive column of steam and smoke hundreds of feet into the air Wednesday afternoon.

Officials said there is no sign that this was an act of terrorism, but city Office of Emergency Management officials said there may have been asbestos contained in the debris that was spewing from the hole in the street.

"Any time you have an explosion like this involving steam and pipes there is a chance that asbestos could be in the air," said Andrew Troisi of the OEM. "We are in process of shutting steam off. This is very much a rescue operation. Anyone who is in the area, please help yourselves and us and leave the area."

"Objective one is shutting off steam main, and then helping the injured. There is no hint of criminality here. In time, this will be under control."

The explosion happened on 41st Street between Third and Lexington Avenues. It is believed to have been either an electrical transformer or a steam pipe that exploded. The FDNY has declared the situation a 5-alarm emergency.