The attack happened at the residence of the minister for political affairs, Amir Muqam, and also wounded three people, said Aslam Khan, a local police official.
Muqam said he saw two or three dead in the blast - members of his security staff - and one of his brothers was wounded.
"I saw two, three bodies on my verandah," Muqam said on state-run Pakistan Television.
Muqam is the provincial chief of the ruling Pakistan Muslim League-Q party and a close ally of President Gen. Pervez Musharraf.
Tahir Khan, the city's police chief, said it was a suicide attack.
"I can confirm that it was a suicide attack, but the minister is safe," he said.
He said the attacker, who was on foot, blew himself up just inside the gate of Muqam's house when security personnel tried to stop him.
Pakistan, particularly its northwest, has been wracked by Islamic militant violence, with bombings targeting the military or top officials, and clashes between security forces and pro-Taliban fighters.
In April, a suicide bomber blew himself up just a few feet from Interior Minister Aftab Khan Sherpao, killing 28 other people, at a political rally in the northwestern town of Charsadda.
Sherpao, Pakistan's top civilian security official, escaped with minor injuries.
Also Friday, a bomb exploded at a military checkpoint, killing at least two soldiers and wounding five in Kambal, a town about 200 kilometers (120 miles) north of Peshawar, army spokesman Maj. Gen. Waheed Arshad said. He said the victims were from the paramilitary Frontier Corps.
Amid the deteriorating security, authorities evacuated to Islamabad about 300 Chinese, mostly engineers working on three hydropower projects in remote parts of North West Frontier Province, which borders Afghanistan.
Ataullah Wazir, a senior police official, said the Chinese were shifted for "security reasons," but did not say if there were any specific threats against them.
In 2004, Taliban militants kidnapped two Chinese engineers in the lawless tribal region of South Waziristan. One of the Chinese was freed, but the other was killed in a rescue attempt by Pakistani commandos.
Three Chinese engineers were also killed last year by another group of insurgents in the neighboring province of Baluchistan, where a separatist rebellion is festering.