The blast took place in the town of Jamrud in the Khyber tribal region, an area where militants have previously launched deadly attacks.
Police say the bomb was planted in a vehicle in Jamrud’s busy market area and detonated remotely.
More than 50 were people injured, some of them critically, officials say.
Several militant groups fighting the government are active in the Khyber region, which is close to the Afghan border.
The Pakistani army has carried out several offensives against militants in their tribal strongholds.
Correspondents say there has been recent media speculation about peace talks between elements of the Taliban and the Pakistani government. But militants denied such talks saying they would take revenge if the army continued to carry out attacks against them.
On Monday, at least 10 paramilitary troops, who had been abducted late last year, were found shot dead in neighbouring Orakzai tribal region.