Ghazan, Iqbal's 16-year-old son, was among those killed in the blast.
Fear and loathing
Asif Khan, a resident of Mingora, said: "The entire town is mourning the deaths and it looks like the end of the world has arrived.
"So many people have died at once and now everyone is scared. Many people did not even offer funeral prayers and stood at distances fearing another suicide attacker might strike."
Officials said an investigation had been launched to try and find out who was behind the attack.
Police said the death toll was expected to rise.
Haider Ali, a health official, told the AFP news agency: "At least 41 people are confirmed dead and some 90 injured were brought to hospital."
Out of 16 critically injured people taken to Peshawar's main Lady Reading hospital, three died early on Saturday, hospital official Abbas Khan said.
The Pakistan military said it had lifted a 24-hour curfew in Mingora until 8pm (15:00GMT) to allow relatives to attend funerals.
The Pakistan military has provided blood to local hospitals, two helicopters and road transport for evacuating those seriously injured and was helping people make their way to funerals, it said in a statement.
Another suicide bombing in the region on Saturday killed two people and wounded about 20 others, mostly security personnel, officials said.
The bomber struck a vehicle carrying security forces in the northwestern tribal region of Bajaur, according to Iqbal Khatak, a government official.
He said the severed head of the attacker, who was on foot, was found at the scene.
All the victims were taken to hospital.
Hundreds of people have died across northwest Pakistan in recent months as Pakistani troops have been battling tribal fighters in the Swat valley - a once-popular tourist site.
Major-General Nasser Janjua, a regional commanding officer, said earlier in the week that 400 fighters were hiding in the valley.
"Nobody has claimed the responsibility for the attack, but we suspect the involvement of miscreants against whom the military operation was being carried out," another senior security official said.
Pakistani forces have been searching for Maulana Fazlullah, a religious leader who called for Islamic law in the valley.
The army launched a major offensive in November to drive his followers out of Swat.
A suicide bomb campaign targeting security forces intensified after the army stormed Islamabad's Red Mosque last July to crush a conservative student movement.
About 2,000 people were killed in violence across Pakistan last year.