Police said 13 members the family had come to the city from the adjacent Charsadda district to take part in a marriage function. The blast killed nine of them, they said.
The police said 225 kg of explosives were planted in a parked car and it was detonated by remote control. The blast damaged shops and caused many vehicles to go up in flames.
Majority of the dead have been identified while still four bodies including that of a child are yet to be identified.
AIG bomb disposal squad Shafqat Malik said it was a remote control blast and the explosive was dumped in a vehicle.
Some reports said there were two blasts but it is yet to be confirmed or denied by authorities.
The dead also included six women and four children, hospital authorities. At least 12 are in critical condition, said doctors at Lady Reading Hospital.
The blast occurred when the police official on duty asked a driver of a car to remove it from the site.
Pakistani Taliban were generally blamed for such attack.
However, the banned militant group denied its involvement in today's blast that took place in Peshawar, the capital of troubled Khyber Pakhtunkhwa province.
The explosion occurred at a time when the shops were just opening.
Meanwhile, the trading community of Qissa Khawani Bazaar has announced three days of mourning to express solidarity with the bereaved families.
This is the third blast in the city since last Sunday when over 80 people were killed as twin suicide bombers struck a historic church. On Friday, 19 people were killed when a blast took place inside a bus carrying government employees.