The attack happened on Thursday in Kurram, a district in Khyber Pakhtunkhwa province where sectarian clashes between majority Sunni Muslims and minority Shi'ites have killed dozens of people in recent months.
No one immediately claimed responsibility for the attack. It came a week after authorities reopened a key highway in the region that had been closed for weeks following deadly clashes.
Local police official Azmat Ali said several vehicles were travelling in a convoy from the city of Parachinar to Peshawar, the capital of Khyber Pakhtunkhwa, when gunmen opened fire. He said at least 10 passengers were in critical condition at a hospital.
Aftab Alam, a provincial minister, said 42 people were killed in the attack, and that officers were investigating to determine who was behind it.
Interior Minister Mohsin Naqvi called the shootings a "terrorist attack." Prime Minister Shehbaz Sharif and President Asif Ali Zardari condemned the attack, and Sharif said those behind the killing of innocent civilians will not go unpunished.
Kurram resident Mir Hussain, 35, said he saw four gunmen emerge from a vehicle and open fire on buses and cars.
"I think other people were also firing at the convoy of vehicles from nearby open farm field," he said. "The firing continued for about 40 minutes." He said he hid until the attackers fled.
"I heard cries of women, and people were shouting for the help," he said.
Ibne Ali Bangash, a relative of one of the victims, described the convoy attack as the saddest day in Kurram's history.
"More than 40 people from our community have been martyred," he said. "It's a shameful matter for the government."
Baqir Haideri, a local Shi'ite leader, denounced the assault and said the death toll was likely to rise. He accused local authorities of not providing adequate security for the convoy of more than 100 vehicles despite fears of possible attacks by militants who had recently threatened to target Shi'ites in Kurram.
Shop owners in Parachinar announced a strike on Friday to protest the attack.
Shi'ite Muslims make up about 15 per cent of the 240 million population of Sunni-majority Pakistan, which has a history of sectarian animosity between the communities.
Although the two groups generally live together peacefully, tensions have existed for decades in some areas, especially in parts of Kurram, where Shi'ites are the majority.
Dozens of people from both sides have been killed since July when a land dispute erupted in Kurram that later turned into general sectarian violence.
Pakistan is tackling violence in the northwest and southwest, where militants and separatists often target police, troops and civilians. Violence in the northwest has been blamed on the Pakistani Taliban, a militant group that is separate from Afghanistan's Taliban but linked to them. Violence in southwestern Balochistan province has been blamed on members of the outlawed Baloch Liberation Army.
