The blast took place in the Lower Dir region, which lies close to the Afghan border.
Around 200 mourners were attending the open-air funeral of Bakhat Khan when the bomber struck, police officer Sher Hassan Khan said.
Many others were wounded and were being transported to hospitals, he said.
Bakhat, who died in his sleep Wednesday, was a member of a local "lashkar" or militia that was opposed to Taliban rule in the region.
The tribesmen in the northwest have formed several such militias, for which they typically receive limited government funding. They have had some success at stopping militant infiltration, but are routinely struck by revenge attacks.
Many of the bloodiest bombings of the last three years have targeted "lashkar" members or their families.
On Monday, Taliban gunmen killed four children as they were returning from school close to the main northwestern city of Peshawar. The insurgents said the attack was aimed at stopping locals there supporting a tribal militia that is fighting the militants.