The bomber walked up to a checkpoint along the road and detonated his explosives when a police officer asked him to stop, city police chief Liaquat Ali told The Associated Press. He paid glowing tributes to the slain policeman, saying if he had not acted the attacker might have struck a more crowded area, killing more people.
TV footage from the scene showed shattered glass and debris covering a wide area as security officials flooded the zone. At least 14 people were wounded in the attack.
Recent militant attacks have struck a range of targets, from markets popular with women to security checkpoints. Thursday's blast rocked a busy sector of Peshawar where buildings housing the state-run airline, a public school and a government insurance company were located. A Catholic church was nearby, likely preparing for Christmas Eve services, but the bomber had been walking away from it.
Mian Iftikhar Hussain, the region's information minister, also noted army installations were close but he "cannot say for sure what the target was."
On Tuesday, a suicide bomber set off explosives at the Peshawar Press Club, a brazen attack on the media in what has long been an unsafe environment for journalists to operate.
Peshawar has been hit at least seven other times in the onslaught that began in October. In one case, at least 112 people died when a car bomb went off in a market frequented by many women -- one of the country's deadliest attacks ever.
The government condemned the bombings but vowed it would not be deterred in its battle to eliminate the Pakistani Taliban from its soil. The army offensive in South Waziristan tribal region has left hundreds of militants dead, but many are believed to have simply fled to other parts of the country's lawless tribal belt bordering Afghanistan.
Even though the Pakistani Taliban may be under siege, it is possible they are relying on other allied militant groups to help carry out the strikes across the country. Strong networks are believed to exist among the varying extremist factions in Pakistan, many of whom want to see the Pakistani state toppled because of its relations with the United States.
Also Thursday, police said an investigation into a March attack on the visiting Sri Lankan cricket team had determined that the attackers wanted to hold the players hostage in exchange for two leading figures of the Lashkar-e-Jhangvi militant network.
Zulfiqar Hameed, a senior police official, said the information came from the interrogation of several suspects and their associates. Around a dozen gunmen struck the team in the eastern Pakistani city of Lahore. Six security officers and a driver died in the onslaught.
Pakistan recently boosted security all over the country, including Peshawar, because it is the Islamic holy month of Muharram, which is often marred by bombings and fighting between the country's Sunni Muslims and its Shiite minority, authorities said.
Muharram is especially important for Shiites, who stage processions to mourn the seventh century death of the prophet Muhammad's grandson -- an event that led to the split in Islam between the Shiite and Sunni sects.
The culmination of Shiite rites is Ashura, the ninth and 10th days of Muharram, when Shiites stage processions, beating their bare backs with chains and blades, bloodying themselves in a sign of penitence over the death of Mohammed's grandson, Imam Hussein.