"It was a bomb blast," police official Islam Khan said. "We're investigating whether it was a planted device or a suicide attack."
The number of people injured wasn't revealed.
Lower Dir Police Chief Saleem Marwat said the explosion in the town of Jandol also damaged a nearby vehicle showroom, Pakistan's English-language newspaper Dawn reported.
Geo News reported it was the sixth bomb attack in six days days in Pakistan.
The Lower Dir district is near Pakistan's semi-autonomous tribal belt along the country's border with Afghanistan.