Residents in Peshawar said the effects of the explosion were felt 10 kilometers from the site in Badbair, known as a residential colony for Pakistan Air Force officials.
"So far, there are three people killed and seven wounded," Sahibzada Anis, the city's administrator, said.
The attacker apparently targeted a police station outside the Badaber air base on the city's outskirts.
"The blast badly damaged the police station, a mosque and a shop," Anis added.
The injured and bodies are being taken to the hospital. Relief workers as well as police have already kick-started the relief action.