A group of 8-10 suicide attackers wearing paramilitary Frontier Corps uniforms entered Army Public School on Warsak Road and started indiscriminate firing, killing more than 100 people, including 84 students, Khyber-Pakhtunkhwa Chief Minister Pervez Khattak told reporters.
20 bodies were in the Lady Reading Hospital (LRH) and 60 in Combined Military Hospital (CMH), he said.
30 injured have been shifted to LRH and 39 to CMH.
He announced a three-day of mourning.
Prime Minister Nawaz Sharif condemned the attack and termed it a "national tragedy." He has left for Peshawar to personally monitor the operation.
A police official said that the school has been cordoned off, with a rescue operation in progress. About 500 students and teachers were believed to be inside at the time of attack.
Mushtaq Ghani, provincial information minister, said the militants entered through a graveyard which is adjacent to the school, called Army Public School.
A heavy contingent of police and security forces have blocked the roads leading to the school, taking control of the entire area.
In a brief statement, the army said: "Rescue operation by troops underway. Exchange of fire continues. Bulk of student and staff evacuated. Reports of some children and teachers killed by terrorist."
The Tehreek-e-Taliban Pakistan spokesman claimed that its six suicide bombers attacked army school.
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