The bomb exploded in Shahukhel village in Hangu district, which borders the lawless Orakzai tribal district, a known Taliban hideout, said district police chief Abdul Rashid.
He said the device was planted outside the house of a tribal elder who organised a village force against the Taliban.
"The bomb hit two passer-by children. One of them died," Rashid said, adding that the blast seemed to be the work of Taliban militants. The child who died was nine years old and the one wounded was 13, he added.
No one has so far claimed responsibility for the attack.
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