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The blasts appeared to mark a return to a campaign of attacks that targeted the group's strongholds between 2013 and 2014, ostensibly in revenge for its military support for Syrian President Bashar al-Assad.
The blasts hit a narrow shopping street in the Burj al-Barajneh neighbourhood that is also home to a street market.
IS claimed the blasts in an online statement.
"Soldiers of the Caliphate" detonated explosives planted on a motorbike in an area frequented by Shiites, using a derogatory term to refer to the sect, the statement said.
"After the apostates gathered in the area, one of the knights of martyrdom detonated his explosive belt in the midst of them," the statement added.
The claim could not be independently verified but it followed the usual format of IS claims of responsibility and was circulated on jihadist online accounts.
The army said the attacks were carried out by two suicide bombers and that the body of a third, who had failed to detonate his explosive device, had been found at the scene of the second blast.
- 'Thought world ended' -
The attacks were the deadliest to hit a Hezbollah stronghold since the group entered the conflict in neighbouring Syria in support of Assad.
A string of them targeted areas where the group is popular throughout 2013 and 2014.
In the most recent one in the southern suburbs of Beirut in June of last year, a suicide car bomb killed a security officer.
Burj al-Barajneh is a largely impoverished suburb of the city home to a mostly Shiite Muslim population.
The neighbourhood is bordered by the Burj al-Barajneh Palestinian refugee camp.
At the scene, an AFP photographer saw extensive damage to buildings around the site of the blast and bodies inside some of the nearby shops.
There was blood on the streets, and security forces were trying to cordon off the scene and keep people from gathering.
Local television stations showed footage of wounded people being carried away by emergency services and civilians.
"I'd just arrived at the shops when the blast went off. I carried four bodies with my own hands, three women and a man, a friend of mine," a man who gave his name as Zein al-Abideen Khaddam told local television.
Another described the sound of the blasts.
"When the second blast went off, I thought the world had ended," he said.
The wounded were evacuated to several hospitals in the area, including the Bahman hospital in neighbouring Haret Hreik.
"We've received dozens of wounded people and they're continuing to arrive," a doctor there told AFP.
- Day of national mourning -
Prime Minister Tammam Salam announced a national day of mourning for Friday, local media reported.
And former premier Saad Hariri, who leads a political bloc opposed to Hezbollah and its allies, condemned the blast as "vile and unjustified".
French President Francois Hollande condemned the attack as "despicable".
Between July 2013 and February 2014, there were nine attacks on Hezbollah throughout Lebanon, mostly claimed by Sunni extremist group.
Despite ostensibly targeting Hezbollah, the victims of the attacks have been overwhelmingly civilians.
The deadliest in southern Beirut was in 2013, when 27 people were killed by a car bomb in the Rweiss district.
The attacks were claimed by several different Sunni groups, but all cited Hezbollah's role in the conflict in Syria.
However the IS statement did not mention the conflict, instead using strictly sectarian language against Shiites.
Hezbollah is a staunch ally of the Syrian regime and is backed by Iran, another key supporter of the Damascus government.
In early 2013, it dispatched fighters to back government forces against a Sunni-dominated uprising that began with anti-regime demonstrations in March 2011.
Since then, it has become deeply involved in the conflict, deploying fighters throughout the country to bolster Assad's troops on a range of battlefields.
At least 971 Hezbollah fighters have been killed in Syria, according to the Britain-based Syrian Observatory for Human Rights monitor.
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The blasts hit a narrow shopping street in the Burj al-Barajneh neighbourhood that is also home to a street market.
IS claimed the blasts in an online statement.
"Soldiers of the Caliphate" detonated explosives planted on a motorbike in an area frequented by Shiites, using a derogatory term to refer to the sect, the statement said.
"After the apostates gathered in the area, one of the knights of martyrdom detonated his explosive belt in the midst of them," the statement added.
The claim could not be independently verified but it followed the usual format of IS claims of responsibility and was circulated on jihadist online accounts.
The army said the attacks were carried out by two suicide bombers and that the body of a third, who had failed to detonate his explosive device, had been found at the scene of the second blast.
- 'Thought world ended' -
The attacks were the deadliest to hit a Hezbollah stronghold since the group entered the conflict in neighbouring Syria in support of Assad.
A string of them targeted areas where the group is popular throughout 2013 and 2014.
In the most recent one in the southern suburbs of Beirut in June of last year, a suicide car bomb killed a security officer.
Burj al-Barajneh is a largely impoverished suburb of the city home to a mostly Shiite Muslim population.
The neighbourhood is bordered by the Burj al-Barajneh Palestinian refugee camp.
At the scene, an AFP photographer saw extensive damage to buildings around the site of the blast and bodies inside some of the nearby shops.
There was blood on the streets, and security forces were trying to cordon off the scene and keep people from gathering.
Local television stations showed footage of wounded people being carried away by emergency services and civilians.
"I'd just arrived at the shops when the blast went off. I carried four bodies with my own hands, three women and a man, a friend of mine," a man who gave his name as Zein al-Abideen Khaddam told local television.
Another described the sound of the blasts.
"When the second blast went off, I thought the world had ended," he said.
The wounded were evacuated to several hospitals in the area, including the Bahman hospital in neighbouring Haret Hreik.
"We've received dozens of wounded people and they're continuing to arrive," a doctor there told AFP.
- Day of national mourning -
Prime Minister Tammam Salam announced a national day of mourning for Friday, local media reported.
And former premier Saad Hariri, who leads a political bloc opposed to Hezbollah and its allies, condemned the blast as "vile and unjustified".
French President Francois Hollande condemned the attack as "despicable".
Between July 2013 and February 2014, there were nine attacks on Hezbollah throughout Lebanon, mostly claimed by Sunni extremist group.
Despite ostensibly targeting Hezbollah, the victims of the attacks have been overwhelmingly civilians.
The deadliest in southern Beirut was in 2013, when 27 people were killed by a car bomb in the Rweiss district.
The attacks were claimed by several different Sunni groups, but all cited Hezbollah's role in the conflict in Syria.
However the IS statement did not mention the conflict, instead using strictly sectarian language against Shiites.
Hezbollah is a staunch ally of the Syrian regime and is backed by Iran, another key supporter of the Damascus government.
In early 2013, it dispatched fighters to back government forces against a Sunni-dominated uprising that began with anti-regime demonstrations in March 2011.
Since then, it has become deeply involved in the conflict, deploying fighters throughout the country to bolster Assad's troops on a range of battlefields.
At least 971 Hezbollah fighters have been killed in Syria, according to the Britain-based Syrian Observatory for Human Rights monitor.
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