The attacker rammed his explosives-laden vehicle into the building, police said.
At least seven police officers died in the attack, CNN reported, quoting senior police official Muhammad Ejaz Khan.
Khan said 23 others, including police and civilians were injured in the blast, adding several more people were still under the debris.
The state-run Associated Press of Pakistan reported 28 people were injured, four of them seriously.
The report said several police officers were in the building when the explosives-laden car rammed into the two-story facility, destroying it.
The report said the explosion was so powerful it was heard around the city and broke windowpanes of nearby buildings.
The BBC reported the building was near Pakistani military facilities and the U.S. Consulate.
The attack was claimed by the banned Pakistani Taliban, which has escalated its violence since the May 2 killing of al-Qaida leader Osama bin Laden by U.S. forces during a raid on his compound in the Pakistani garrison town of Abbottabad.
The police building also housed a facility for questioning militants, which may have been the target of the attacker, CNN said. No militant was in the facility at the time of the attack, the official said.
Peshawar is the capital of the northwest Khyber-Pakhtunkhwa province near the country's tribal regions which provide hideouts to the militants.
Last Sunday, a group of militants launched a daring attack on the heavily fortified naval air station in Karachi, Pakistan's largest city, and its main port. At least 12 security personnel along with many of the militants, died in the attack and in the ensuing gun battle that lasted into Monday. The attackers also destroyed two planes.
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