According to security officials, the dead included a squadron leader, two airmen and five trainee flying officers.
The largest air force base in Pakistan is located in the region.
"Perhaps Bhutto should have listened to Musharraf and delayed her return to Pakistan until the volatile security situation was better"
ndur5, Irving, US
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The bomber's dismembered head was found at the scene, said Hamid Javed, a police officer.
"There was a huge bang which was heard several kilometres away," he said.
Anwar Ali, another police officer, told the AFP news agency that three school children were also hurt when shrapnel hit a nearby van in which they were travelling.
Sargodha was the scene of a failed suicide bomb attack a few months ago when an attacker managed to enter a police compound but was shot dead before he could blow himself up.
The attack comes two days after a bomber struck the army office of Pervez Musharraf, the president, in the city of Rawalpindi.
The blast comes as Benazir Bhutto, the former prime minister, travels to Dubai, in the United Arab Emirates, to visit her husband and children.
She had previously cancelled the trip amid fears that Pakistan could be placed under emergency rule in her absence if the supreme court rules against Musharraf's recent election win.
"She's going to Dubai and should be back in two to four days," said Jameel Soomro, media coordinator of the Pakistan People's Party.
Bhutto said: "Whatever decision comes from the supreme court in this matter, it should be accepted by everyone and if it is resisted and emergency is imposed and fundamental human rights are suspended we will not accept this.
"Our workers will not accept this, the nation will not accept this and I know other political parties will also not accept this."
Nadim Baba, Al Jazeera's correspondent in Islamabad, said that if the court rules against Musharraf, he will not take the result lightly.
In August, Musharraf nearly put Pakistan under a state of emergency amid violence and mounting political turmoil.