"A suicide bomber blew up a car filled with explosives in the market," Ali Hasan, a police officer, said.
Local officials said that a number of shop collapsed and vehicles were destroyed as the blast destroyed the Kacha Paka market.
"A restaurant and many shops have collapsed. It's chaos here. There's huge devastation," Ibn-e-Ali, a former judge and resident of the area, said.
"My house is 1km away but the blast was so huge it felt as if it was next door."
Rubble searched
Police said that rescue workers were searching the rubble for any survivors.
Asmat Ullah, another police official, said that the Shia Muslim-owned Hikmat Ali Hotel, which was badly damaged in Friday's blast, could have been the target of the bombing.
However, Al Jazeera's Kamal Hyder, reporting from the capital, Islamabad, cautioned that any motive for the attack was unlikely to be "sectarian".
"The area has known Sunni-Shia tensions in the past and there have been clashes and deadly consequences," he said
"[But] this was an indiscriminate attack against civilians in an open market and perhaps a warning by the militants who are trying to destabilise Pakistan."
It was the second attack in Kohat in two days after a bomb planted outside a shop injured six people on Thursday.
Northwest offensive
Pakistan's military launched a major offensive against the Taliban in North West Frontier Province in April.
The fighting displaced nearly two million people and left more than 1,800 Taliban fighters dead, according to the military.
But analysts said that many of the fighters simply melted away into other areas in the face of the military onslaught.
Sporadic attacks continue to take place, despite Yusuf Reza Gilani, Pakistan's prime minister, saying that Taliban fighters had been "eliminated" in the region.
"The Pakistani troops have made substantial gains against the Taliban, but they will also tell you that it is virtually impossible to stop a suicide bomber," Al Jazeera's Hyder said.
"The fact that there has been less bombings since the military went on the offensive indication [of their success], but the other side still have the capacity to hit back."