No group has immediately claimed responsibility for the strike, which is the second lethal attack in as many days. But Syed Kalim Imam, Islamabad's most senior police officer, said "terrorists and extremists are behind this".
Both attacks came amid a Pakistani military offensive in South Waziristan against the Taliban in their tribal stronghold.
The army concentrated its effort to take control of the streets of Kotktai on Thursday - the hometown of Pakistani Taliban chief Hakimullah Mehsud situated near to the border with Afghanistan.
The battle for Kotkai is strategically important because it lies on the way to Sararogha, where military analysts say they expect to see the strongest resistance.
In an army statement released on Thursday, Major-General Athar Abbas said the Taliban was engaging in "intense encounters" in hills surrounding Koktai, but the army had taken control of land east of the town.
Both Mehsud and his deputy, Qari Husain, are believed to be still in the region directing a guerrila-style defence.
According to Islamabad's interior ministry, the toll for the offensive to date is 18 soldiers and 129 Talibs. No statistics on civilian casualties are kept and foreign journalists are not permitted into the warzone.
Although the army has closed off all roads to the region, civilian refugees are still fleeing Waziristan and have told the Associated Press what they have seen in recent days.
Awal Jan, a refugee from Sarwakai, said: "We saw no ground forces on the way, not even any movement except helicopters and airplanes.
"But we saw a lot of Taliban movement. They are roaming around on their vehicles and digging trenches in the mountains."
Concern for refugees fleeing the fighting in South Waziristan, where about 38,000 ground troops and air fire are attempting to eliminate about 10,000 Taliban fighters, has been paramount since the offensive started there on Saturday.
| Exclusive report: Thousands flee South Waziristan as the conflict escalates
The numbers of refugees pushing into Paharpur, about 45km from Dera Ismail Khan, led baton-wielding police to beat back crowds rushing for bread at an aid distribution centre run by the local authority.
"We came here for bread, but the police beat us up," said Rahmatullah Mehsud - one of the injured new arrivals in the town. "There the Taliban were messing with things and the army was showering bombs. Here we have to bear the clubs."
But Javed Shaikh, an aid administrator, said there was plenty of food, but refugees were "impatient".
"There are some policemen deployed who are fed up with the indiscipline of the people," Shaikh said.
Arianne Rummery, a spokeswoman for the UN Refugee Agency (UNHCR) told Al Jazeera that, at present, there are about 125,000 refugees to whom gaining access is a key challenge.
"Even the areas that they are going to in Dir Khan and Tank districts, lower down in the North-West Frontier Province, are very volatile from a security point of view.
"People are mainly being hosted by their extended-kin networks in their host communities. The tribal elders are able to use their networks to ensure that people have somebody to stay with.
"So it is not a critical situation where people don't have shelter at the moment. But obviously as the situation goes on these communities will come under more strain.
"The tradition of generosity in this part of the world by host communities is certainly a very important buffer which is providing that immediate shelter, which is giving life-saving assistance at the moment."