Officials told Pakistan media that most of the dead were members of the Khyber Khasadar Force.
The blast took place near the Karkhano Market, which is the gateway to Khyber Pakhtoonkhwa province in the tribal area along the border region with Afghanistan.
Capital City Police Officer (CCPO) Mubarak Zeb Khan confirmed the incident but the exact nature of the blast was not yet clear.
“Although the exact nature of the blast is being ascertained, it appears to be a suicide attack,” said political agent Khyber Agency Shahab Ali Shah.
TV footage however showed that vehicles parked near the blast site were destroyed in a fire after the explosion.
Rescue officials said meanwhile that an emergency situation has been imposed at the Hayatabad Medical Complex where the injured have been taken.