Mohammad Khaliq, a local police chief, said: "It was a suicide attack. Police started chasing him because he was acting suspiciously and he jumped into a minibus before blowing himself up."
"The policemen following him said he looked to be about 15 or 16 years old."
Body parts were scattered around the area and the minibus was completely destroyed by the blast, Abdul Hai, a police officer said at the scene.
Police said they believed the bomber was trying to target government or security officials in the town but blew himself up when he was detected.
Engravings targeted
Malik Ramzan, a police spokesman, said policemen who had been chasing the bomber were among the dead.
The latest attack came hours after a bomb in another part of Pakistan detonated damaged a rock engraved with images of Buddha. The images attract thousands of tourists every year.
Shrapnel from the blast in the town of Malam Jabba, in Pakistan's Swat district, hit the rock but did not affect images.
Pakistan has suffered a string of attacks since security forces raided the Red Mosque in Islamabad in July, piling pressure on Pervez Musharraf, the country's president, as he faces a political crisis ahead of elections.
Nearly 250 people have died in the attacks, most of which have been suicide bombings.
A further 250 fighters have been killed in clashes since the mosque standoff, the army said.
About 30 people were killed a week ago when two bombers blew themselves up in the garrison city of Rawalpindi, ripping through a military bus and a market near the Pakistani army's headquarters.
Musharraf has been under mounting pressure to tackle al-Qaeda and Taliban fighters, whom US officials allege have regrouped in the tribal areas since fleeing there after the events of September 11.