Two members of a local anti-Taliban tribal militia were also killed and four Pakistani troops were wounded in the fighting.
Pakistani officials said some 100 militants from Afghanistan crossed the border and attacked a village in the Kitkot area, some 40 kilometres northwest of Khar, the main town of Pakistan Bajaur tribal district.
"They forced the residents to vacate houses and torched more than 10 houses," Tariq Khan, a senior government official told AFP.
"Clashes are continuing and troops are retaliating the fire."
A senior security official based in Peshawar, the region's main city, confirmed the attack and death toll.
Officials said Pakistani Taliban were hiding in eastern Afghanistan and launching cross-border attacks on Pakistani troops and anti-Taliban tribal militia.
Afghanistan shares a disputed and unmarked 2,400-kilometre border with Pakistan, and Taliban and other al Qaeda-linked militants have carved out strongholds on either side.
Afghanistan and Pakistan blame each other for several recent cross-border attacks that have killed dozens and displaced hundreds of families.
Bajaur was the scene of major anti-militant operations in August 2008 and February 2009 and the military said the area had been secured.
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World superpower cannot even control its own area of operations. Or perhaps they are supporting TTP?
A good news after a long time but sincerely hope that there are no innocent civilians amongst the dead.