The death toll was expected to rise after the explosion at the Eidgah used-clothes market in Parachinar city, the capital of Kurram tribal district on the border with Afghanistan.
"We have received 16 dead bodies and 30 people are being treated at the hospital now and we have discharged over a dozen others who had sustained minor injuries," a doctor at the government-run district headquarters hospital told AFP, requesting anonymity.
He said eight of the injured were in critical condition.
Amjad Ali Khan, the political administrator of Kurram, confirmed the toll and said the most seriously wounded were taken by helicopter to the region's main city of Peshawar.
"It was an IED (Improvised Explosive Device) blast, the bomb had been hidden in a bag left at the market," he added.
Local television footage showed hundreds of male market-goers fleeing the area, which was strewn with clothing and debris, as police tried to cordon off the location and ambulances rushed to the site.
No one immediately claimed responsibility for the attack.
Kurram is one of Pakistan's seven semi-autonomous tribal districts which are governed according to local laws and customs.
Overall levels of violence in Pakistan have decreased this year following a nationwide military-led offensive against militants.
The deadliest-ever attack in Pakistan came in January 2013 when a suicide bomber blew himself at a snooker hall in the southwestern city of Quetta.
As rescue workers rushed to the scene, a truck packed with explosives parked nearby also detonated, with the overall toll close to 100 dead.