The attack is likely to be politically-linked, though it also has implications for the entertainment industry.
According to local reports, grenades were thrown by people sitting at the back of the theater. Some of the victims were killed by the stampede of people trying to get out of the building. Reports say that more than 100 people were in the Qissa Khawani Bazaar theater, also known as the Picture House, at the time.
The attack happened shortly after the Pakistan government had announced that it had formed a committee to begin talks with the Pakistan Taliban. Peshawar is considered to be on the front line of Pakistan government resistance to Taliban insurgents.
The Taliban regards the film industry as sinful, and closed down cinemas in the Swat Valley between 2007-2009, when it controlled the area. Two Peshawar cinemas were destroyed by suicide bombers on June 6, 2009.
No group has yet claimed responsibility for the attack.