An al-Qaeda source told the BBC one of its members had carried out the attack.
It was the deadliest incident in the capital since Abdrabbuh Mansour Hadi was elected president in February.
One of Yemen's security chiefs was sacked after the attack by a presidential decree.
'Real massacre'
Defence ministry officials say 222 people were injured in Monday's attack.
"We were in a parade, suddenly there was a huge explosion. Dozens of our men were killed. We tried to help them," Col Amin al-Alghabati told the Reuters news agency.
"The suicide bomber was dressed in a military uniform. He had a belt of explosives underneath," he added.
Another soldier, Ahmed Sobhi,
told the Associated Press news agency: "This is a real massacre. There
are piles of torn body parts, limbs and heads. This is unbelievable."
Most of the casualties were from the Central Security Organisation - a paramilitary force commanded by Yahya Saleh, a nephew of former President Ali Abdullah Saleh.
Yahya Saleh was dismissed from his post just hours after the attack.
The soldiers had been practising for a parade for National Unity Day on Tuesday, which marks the anniversary of the 1990 unification of the Marxist People's Democratic Republic of Yemen - also known as South Yemen - and the Yemen Arab Republic, known as North Yemen.
"Yemenis must stand together in the face of this deadly terrorist threat," Brig Karim Nahil said. "We will celebrate our unity tomorrow with the blood of our martyrs on our hands and faces."
An al-Qaeda statement later sent to BBC Arabic said the group had recruited a soldier for the bombing, and that it was carried out in retaliation for "crimes" committed by the Central Security Organisation. Read More
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