Rawalpindi police chief Nasir Durrani said the attacker was on a motorcycle.
No one immediately claimed responsibility. But a senior Pakistani security official told CBS News, the attack was "very, very likely to have been engineered by Taliban militants."
Another police official, Mohammed Nazir, said around 20 people were injured in Thursday's blast.
TV footage from the scene showed pieces of a charred motorbike lying on the ground, as well as a damaged white bus, yellow car and white van. Shattered glass littered the road.
Rawalpindi is a garrison city and the headquarters of the Pakistani military. It lies about 7 miles from the capital, Islamabad.