The blast ripped through the historic Qissa Khawani Bazaar near Khan Raziq police station here in the provincial capital of Khyber Pakhtunkhwa province.
Bomb Disposal Squad personnel who rushed to the site after the explosion said 225 kgs of explosives were used in the blast.
Some reports said there were two blasts but it is yet to be confirmed or denied by the police.
The dead also included six women and four children, hospital authorities.
The police station was named after Khan Raziq, a DSP who himself was assassinated a few years ago.
The blast occurred when the police official on duty asked a driver of a car to remove it the site.
At least 19 shops and six cars were damaged in the blasts.
The banned Pakistani Taliban has denied its involvement in the blast.
The blast led to fire in the market and all that was left was mangled remains of bikes, cars and burnt shops.
The explosion occurred at a time when the shops were just opening.
This is the third blast since last Sunday when over 80 people were killed as twin suicide bombers struck at a historic church here.
On Friday, 19 people were killed when a bomb blast took place inside a bus carrying government employees.
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