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The blast happened in a shop in the town of Torkham, about 50km (30 miles) from Peshawar and was initially thought to be a bomb.
Later reports, quoting the official Pakistan news agency, say it may have been caused by an exploding gas canister. An official said many of the injured were children.
Police say they have no information about any possible motive for an attack.
 Untargeted attacks are rare in the tribal areas
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Among the dead were Afghan refugee children. Another victim was an elderly Pakistani tribesman from the Khyber Tribal Agency.
The BBC Islamabad correspondent says that, while there are frequent bomb blasts in other parts of Pakistan, this kind of apparently untargeted attack is not normally associated with the tribal areas close to Afghanistan.
An investigation has been launched and a team of officials has gone to Torkham from the provincial capital to inspect the site.
Refugee shelter
The Torkham Gate is an important border crossing point between Afghanistan and Pakistan.
The province shelters more than a million Afghan refugees, most living in camps at Peshawar and Nowshera.
 Refugees wait to be checked before repatriation
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About 460 Afghan refugees were repatriated through Torkham on Monday under a programme sponsored by the UN High Commissioner for Refugees.
Torkham attracts both local and foreign tourists, who often come from Peshawar through the historic Khyber Pass.
Officials say public and private vehicles are usually checked at several posts by paramilitary and tribal police.
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