The attacker drove the car into buildings behind the police station at Domail in Bannu district of Khyber- Pakhtunkhwa province early this morning.
The explosion was heard from several kilometres away.
A woman and a policeman were killed and 27 others, including 10 women and children and nine policemen, were injured, police officials said.
Seven houses were destroyed or damaged by the blast.
Officials said the death toll could rise as some of the injured were in a serious condition.
A bomb disposal squad official said an estimated 500 kg of explosives were used in the attack.
Pakistan has witnessed a sharp surge in violence by the Taliban and other militant groups ahead of the May 11 general elections.
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