The blast occurred inParachinar in Kurram agency when the market was filled with a large number of people who were buying used and second-hand winter clothes.
Security forces reached the spot and cordoned off the area and evidence is also being gathered from the crime scene.
"At least 23 have died and more than 50 were injured," said Amjad Ali Khan, the political administrator of Kurram.
Meanwhile, two suspects were taken into custody from the blast site whereas police said that the bomb was hidden in a cloth bale.
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However, officials have so far not confirmed the exact nature of the blast.
A doctor at the hospital where the wounded were taken said that most of the injured were in "critical condition" and added that the death toll could increase.
Emergency has been declared in all hospitals in Parachinar.
The market, where used winter clothes are sold, is located near the entry point of Parachinar town.
The army evacuated 23 seriously injured blast victims to Peshawar in two helicopters.
The agency is adjacent to North Waziristan where Operation Zarb-i-Azb is in progress against the Pakistani Taliban and other insurgent groups.