The villagers destroyed 20 houses suspected of housing Taliban fighters, he said.
At least four fighters were killed in the clash.
Pakistan's government has in the past encouraged local citizens to help drive out the Taliban.
"It is something very positive that tribesmen are standing against the militants. It will discourage the miscreants," Rehman was quoted by the Associated Press as saying.
The fighting came in response to a suicide bombing that killed at least 30 people on Friday in Upper Dir.
The district borders the Swat valley region where government troops are engaged in fierce battles with the Taliban.
About 15,000 soldiers have been battling an estimated 2,000 Taliban fighters in Swat for more than a month.
There have been a number of bombings in cities across Pakistan in apparent retaliation to the army's offensive in the NWFP.
The attacks reached Islamabad, Pakistan's capital, late on Saturday when a suicide bomber detonated his explosives at a police compound, killing two people.
At least three other people were wounded in the attack.
Police said the building was the base for an emergency response unit.
Waqar Shah, an officer on duty at the emergency call centre at the time of the attack, told the AP that the attacker was spotted as he climbed over a wall.
"He jumped in from the rear wall, then ran toward the offices," he said. "One of our guys opened fire on him and he fell and blew up."
There was no immediate claim of responsibility for the blast.