More than 50 others were injured in the explosion on the busy Ferozepur Road close to a vegetable market in the south of the city.
The Pakistani Taliban said it was behind the explosion.
Reports suggest it was a suicide bomber on a motorbike, and the target may have been police working in the area. Police officers are among the dead.
Windows were blown out in nearby buildings by the force of the blast.
Eyewitness Sher Dil, who works at an office near the site, said he heard a "deafening blast".
