Superintendent of Police Hilal Haider and three others were killed when the officer's vehicle was hit by the blast outside a police station near the famous Qissa Khwani Bazar in the heart of Peshawar, the capital of the restive Khyber-Pakhtunkhwa province.
Some 30 injured people were taken to a nearby hospital, where officials described the condition of six persons, including a policeman, as serious. A woman was among the injured.
Television news channels reported that the police vehicle was targeted by a suicide bomber though there was no official word on this.
The vehicle was reduced to a mangled heap of metal.
Witnesses said they had seen blood and body parts at the site of the attack.
The market was closed soon after the blast, which created panic in the area.
Security forces cordoned off the area as members of the bomb disposal squad scoured the site for clues.
No group claimed responsibility for the attack though such incidents are usually blamed on the banned Tehrik-e-Taliban Pakistan, which has killed scores of police and security personnel over the past five years.