The bomber struck as young men played volleyball in front of a crowd of spectators, including elderly residents and children, near the town of Lakki Marwat, officials said.
The bloodshed will put President Asif Ali Zardari's efforts to fight the Taliban under greater scrutiny, pressure he does not need at a time when corruption cases against his allies could be revived.
It's just a disaster. I can see flesh, bodies and wounded all around, Fazl-e-Akbar, a witness, told Reuters by telephone. It's dark. Vehicles' headlights are being used to search for victims.
Local police chief Ayub Khan said the bomber blew himself up in his sport utility vehicle in the middle of the field. A second vehicle was believed to have fled the scene.
We have removed all bodies and wounded from the rubble, Khan said, adding that 88 people were killed.
It was one of the bloodiest bombings in U.S. ally Pakistan since the October 2007 attack that killed at least 139 people when former prime minister Benazir Bhutto, Zardari's wife, returned home from self-imposed exile.
An attack on a sporting event is highly unusual, but could be part of the militants' strategy of bombing crowded areas such as markets to inflict mass casualties and spread fear and chaos.
VILLAGE MILITIAPolice said the village had formed an armed anti-Taliban militia, a phenomenon that started in Pakistan last year.
Despite major military offensives against their strongholds, the Taliban have killed hundreds of people in bombings.
Britain's Foreign Office described the attack as horrific and said it underlined the urgent need to fight extremism.
It is a threat that the international community must help Pakistan to tackle, in the interests both of Pakistan's people and of wider stability, it said in a statement.
In a sign of growing security fears, the United Nations will withdraw some of its staff from Pakistan because of safety concerns, a U.N. spokeswoman said on Thursday.
We have got to be on the offensive and launch precise strikes on (militant) training centres and hideouts. They're losing the battle. Nobody in our society supports them, North West Frontier Province's information minister, Mian Iftikhar Hussain, told Reuters.
Violence has intensified since July 2007 when the army cleared militants from a radical mosque in Islamabad.
MILITARY CALLS SHOTS
Zardari's options are limited. Security policies are set by Pakistan's all-powerful military, which nurtured militants in the 1980s to fight Soviet occupation troops in Afghanistan.
Washington wants Pakistan to root out militants who cross into Afghanistan to attack U.S.- and NATO-led troops. But doing so would require strategic sacrifices. Pakistan sees them as leverage against arch-enemy India in Afghanistan.
Washington, frustrated by what it says are inadequate efforts to wipe out the militants, has stepped up pilotless U.S. drone aircraft attacks on Taliban and al Qaeda fighters in Pakistan.
While the strikes killed high-profile figures, they have also generated anti-American anger, making it difficult for Zardari to accommodate his U.S. supporters.
The latest attack came on a day of strikes in the southern city of Karachi, the country's biggest and its commercial capital, to denounce violence gripping the nuclear-armed nation.
The strikes were called by religious and political leaders after a suicide bomber killed 43 people at a religious procession on Monday. The Taliban claimed responsibility and threatened more violence.
They are hired assassins. They are enemies of Pakistan. They are enemies of Islam, Interior Minister Rehman Malik told reporters on a trip to Karachi to show support for residents.
Security forces carried out patrols. But residents were taking no chances.
We are already losing business and can't take the risk of going out today and opening our shops, said Saleem Ahmed, who sells electronics at one of the city's markets.
(Additional reporting by Faisal Aziz in Karachi and Alamgir Bitani in Peshawar; Writing by Michael Georgy; Editing by Mark Trevelyan)