"It was a remote-controlled bomb. Two policemen died on the spot, while a third has succumbed to his injuries a short while ago," Mohammad Haroon, a police official, told the Reuters news agency.
On Friday, in another incident, missiles fired from a suspected US drone killed at least eight people near the town of Mir Ali in North Waziristan's tribal region.
Peshawar, capital of the North West Frontier Province (NWFP) bordering Afghanistan, has borne the brunt of the attacks perpetrated by the Taliban in recent weeks in retaliation for a military offensive launched in the country's semi-autonomous tribal region of South Waziristan.
The military launched its offensive against members of the Tehreek-e-Taliban Pakistan, one of the main anti-government groups, nearly three weeks ago, pitting about 30,000 troops against an estimated 10 to 12,000 Taliban fighters in South Waziristan.
Eight suicide bomb attacks in Pakistan this month alone - six of them in Peshawar - have killed 110 people.
The Pakistani Taliban has claimed responsibility for several of the attacks, but Yusuf Raza Gilani, Pakistan's prime minister, said that many of the group's commanders were on the run.
"They are using the weapons they have scattered here and there," he said.
"God willing, it will take some time, but I assure you things will return to normal soon."
The US, weighing options for how to tackle an intensifying Taliban campaign in Afghanistan, has welcomed the offensive but is keen to see Pakistan tackle Afghan Taliban factions based along the border.
Despite the barrage of bombs, the Pakistani government says it is determined to defeat the Taliban fighters with the help of its allies.