Saturday night's blast occurred as Pakistan's minority Shia community, observing their holiest month of Muharram, were to begin a procession in the heart of the North West Frontier Province's capital.
The blast targeted police guarding the procession, Aftab Sherpao, the Pakistan interior minister, said.
"According to last information we received, 15 people including the suicide bomber have been killed and some 30 wounded, some of them critically," Badshah Gul Wazir, the home secretary, said.
Malik Mohammad Saad, the city's police chief, was among the dead, along with several fellow officers, including Raziq Khan, deputy superintendent, who had been assigned to guard the procession.
The explosion occurred just metres away from Qasim Ali Khan mosque, the largest Sunni mosque in the city. It was also close to a Shia religious centre, which had just been visited by the police caught in the explosion.
Gul Wazir described how the suicide attacker struck as police came out of the Shia religious centre before the procession was due to begin.
"The man was standing in the street and as police came out of the Imambargah, he made his way into the police team and blew himself up," he said.
Soldiers were ready to be deployed to any of 40 districts considered potential flashpoints for violence during the festival of Ashoura, Sherpao said on Sunday.
Heavily armed police and security forces in pickup trucks and armoured personnel carriers patrolled streets in Shia-dominated areas in Peshawar, but no violence was reported.
In Karachi, police and troops from the paramilitary Rangers force were ordered to check all vehicles entering the city for explosives, said Jehangir Mirza, chief of police for Sindh province, where Karachi is the capital.
While Pakistani Shia and Sunni communities usually co-exist peacefully, groups on both sides are blamed for sectarian attacks.
Officials investigating Friday's hotel blast said on Saturday that they were looking at possible links to pro-Taliban activists fighting government forces near the Afghan border.
There was no immediate comment on suspects for the Peshawar attack.
A senior security official said that the bombing was most likely a suicide attack, adding that the severed legs of the suspected bomber were recovered from the site.
"There is no crater in the ground and it is possible that it was a suicide attack, but we cannot say that with authority at the moment," Sherpao, the interior minister, said.
Authorities had already placed key cities, including Karachi and Peshawar, on high alert after Friday's hotel blast, while the US and Britain warned their nationals to exercise caution.
Pakistan is under pressure to curb Taliban activity in its lawless tribal zone bordering Afghanistan.
Afghanistan claims the extremist movement uses the area to recruit and train fighters for cross-border attacks on Afghan, Nato-led and US forces.
It has also accused the Pakistani government and intelligence services of backing the campaign, which claimed some 4,000 lives in 2006, the deadliest year since US-led forces ousted the Taliban in 2001.
Pakistan denies the charges.