The attacker was among the guests and blew himself up shortly after greeting provincial assembly member Shamsher Khan in his reception area, killing the lawmaker and wounding nine other people, according to police and hospital officials.
Swat Valley has been relatively peaceful since the Pakistani military wrested control of the northwestern territory from militants in the spring, but sporadic attacks continue, underscoring the difficulties faced by the army as it battles the Taliban and other extremists near the border with Afghanistan.
Dr. Gul Haleem said the lawmaker's brother Shaukat, was critically wounded in the attack in Deri Kili in Kanju area.
Khan is a member of the broadly secular Awami National Party, which is in power in northwest Pakistan and has been a vocal supporter of army offensives against militants in the region.
Regional police chief Idrees Khan said the attack occurred near the former Taliban stronghold of Shah Dehri.
He said the overall security situation in Swat Valley remained under control despite the continued threat from militants.
The police chief said authorities had foiled several other attacks, including the capture of a would-be teenage suicide bomber who allegedly was planning to attack a gathering on the Islamic holiday of Eid al-Adha over the weekend.
"The Taliban have been struggling to reassert their presence since their defeat," he said. "This incident will not shatter the faith and nerves of the people of Swat."
Pakistan's army launched its latest offensive in South Waziristan in mid-October.