There was no immediate claim of responsibility but militants battling the government in northwestern Pakistan often target troops, officials and symbols of the state.
Friday's attack took place as the bus was traveling through the outskirts of the city of Peshawar, the provincial capital. It was carrying employees at the end of the work week back to their home city of Charsadda.
The explosion also wounded 46 people, said police officer Arif Khan.
Last year, at least 18 people were killed in the same neighborhood in a similar attack on a bus carrying government employees to Charsadda.
A school teacher Haroon Khan was critically wounded during that attack but recovered -- only to die during Friday's blast, the officer said.
Pakistani television showed images of the bus with its tail end completely mangled.
One witness, who was not identified, told Pakistan's Geo Television channel that he was driving his car behind the bus when the blast ripped open the back end. He said people riding on the roof of the bus -- a common sight in this country's overcrowded traffic -- were thrown to the side.
One of the injured passengers speaking from his hospital bed said he was on his way to his village when the bomb went off.
"I was sitting in the bus, and all of us were chatting when suddenly a powerful blast shook us, and something hit me in the chest," said Mehboob Ali, 42, speaking from a hospital bed.
Militants in northern Pakistan who are trying to overthrow the government and establish a hard-line Islamic state have been waging war in the northwest against the military.
Prime Minister Nawaz Sharif came into office in June with a promise to open negotiations with the militants to end years of conflict.
But the talks seem to have gone nowhere so far, and the militants have continued with attacks such as the one on Friday.
Last Sunday, two suicide bombers attacked a church in Peshawar, killing dozens of Christians. Militants in northwestern Pakistan also killed a Pakistan Army general earlier in September.
Many in Pakistan support talks with the militants whom they see as fellow Muslims unfairly targeted by the military at the behest of the U.S. government. Washington has repeatedly urged the government to deal with militants in the tribal areas bordering Afghanistan to the west.
University student Hazrat Bilal, 23, was wounded in Friday's the blast. He urged the government to hold peace talks with the militants.
"If the peace talks fail, then the government must take firm action against these militants," Bilal said.
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