Police said the blast took place near a rickshaw in Naurang Bazaar in the Sarai Naurang area.
Hospital authorities confirmed that the bodies of seven victims were shifted to Naurang Hospital, adding that two traffic police personnel were among those martyred in the attack.
Officials said the injured included women and children, while an emergency was declared at Sarai Naurang Hospital following the incident.
District Police Officer Nazir Khan said a vehicle packed with more than one maund of explosives had been used in the blast.
He said investigators were examining whether the explosion was a suicide attack or triggered remotely, adding that militants had begun targeting innocent civilians.
Separately, Sohail Afridi sought a report on the incident from the provincial police chief and described the attack as deeply tragic.
The chief minister said the provincial government would provide all possible support to the victims and their families.
Pakistan has witnessed a sharp rise in cross-border militant attacks, especially in Khyber Pakhtunkhwa and Balochistan, since the Afghan Taliban returned to power in Afghanistan in 2021.
Islamabad has repeatedly urged Kabul to stop militant groups from using Afghan territory to launch attacks inside Pakistan, but tensions between the two countries have continued despite several rounds of talks and ceasefire efforts.
