The attack came as thousands of Muslims staged rallies across the country to celebrate Eid Milad-un-Nabi, which marks the Prophet Mohammed's birthday.
Two or three armed men hiding behind the trees opened fire on hundreds of people carrying banners and reciting hymns in the Dhaki More neighbourhood of Dera Ismail Khan district, senior police officer Bashar Khan said.
The rally was organised by a Sunni Muslim party. No arrests were reported.
Khan said seven participants in the rally were wounded in the attack, one of whom died later in hospital.
Health officials confirmed the casualties.
"We received seven people with bullet wounds, one died of his injuries and two are still in critical condition," said Akhtar Ali, a doctor at a local hospital.
Officials refused to speculate who could be behind the attack, in a town which has been hit frequently by sectarian violence and extremist attacks.
Shi’ites account for about 20 percent of Pakistan's Sunni-dominated population of 167 million. Although the two communities usually coexist peacefully, more than 4,000 people have died in outbreaks of sectarian violence since the late 1980s.
Peshawar: Gunmen opened fire on a religious procession in northwestern Pakistan on Saturday, killing a man and wounding several others, officials said.
First Published: Saturday, February 27, 2010, 15:40