The bus, which was reportedly carrying Chinese engineers and local security personnel, was en route to the Dasu dam in Upper Kohistan. Thirty people were on the bus at the time of the blast.
Officials said it was unclear whether the blast was caused by a roadside bomb or a device planted inside the bus.
"The bus plunged into a deep ravine after the blast and caused heavy losses. One Chinese engineer and one soldier are missing. The rescue operation is launched and the entire government machinery has been mobilised to rescue the injured by air ambulance," a senior government official told Reuters.
Numerous people were injured in the attack and a local civilian was among the dead, officials said.
Dasu dam is one of the most important Belt and Road infrastructure projects that China is working on in Pakistan. The hydroelectric project is part of the China-Pakistan Economic Corridor, which aims to provide a land route between western China and the Gwadar sea port in southern Pakistan.
But the Kohistan region, which borders the former Pakistani Taliban stronghold of the Swat valley, has suffered years of insecurity. In 2012, 18 Shiite pilgrims were taken off a bus and shot dead at a checkpoint set up by militants.
In 2015 militants attacked a paramilitary outpost, injuring five Pakistani rangers. Attacks on foreigners, including Chinese citizens, are rare in Pakistan but there have been a number of high profile attacks in the past.
In May, five people were killed when a bomb exploded outside a hotel in the city of Quetta. China's ambassador was due to arrive at the hotel at the time, but escaped injury.
Pakistan's branch of the Taliban later claimed the attack, saying that foreign officials were among the targets of the bombing.