The attack occurred in the Budhher area of Peshawar, Dawn News reported.
Geo News quoted police as saying more than a dozen attackers first hurled hand grenades at the home of Zafar Khan and locked the women inside the home.
The attackers took the male family members outside and killed them all, including two boys, aged 8 and 10, senior police official Rahim Shah said.
Khan, who was the chief of a local peace committee and member of a special police force, had been killed in another attack last Sunday, CNN said.
Dawn News said the attack appeared to be the result of religious rivalry between two extremist groups in the region.
A day earlier in Peshawar, three grenade explosions during a movie showing inside the Shama Cinema killed 11 people and injured 25 others. The facility's owners were quoted as saying they had been receiving threats.
A similar hand grenade attack inside another Peshawar movie house earlier this month killed five people and injured 20 others.