Security forces have surrounded the interrogation centre near the town of Bannu, where around 20 fighters from Tehreek-e-Taliban Pakistan (TTP) - an umbrella group of Islamist and sectarian groups - are holed up.
According to a provincial government spokesman the militants were demanding safe passage to Afghanistan.
"We are in negotiations with the central leaders of the Pakistani Taliban in Afghanistan," Mohammad Ali Saif, a spokesman for Khyber Pakhtunkhwa provincial government, told Reuters.
He said the relatives of the militants had also been involved in initiating talks with the militants inside the facility.
At least one counter-terrorism official was killed by the militants, who according to authorities had snatched weapons off their guards while under interrogation. Several significant TTP members were present at the centre, Saif said.
He did not say how many security personnel were being held hostage. But, an intelligence officer told Reuters that there were six hostages - four from the military and two from the counter-terrorism.
The TTP, that has stepped up attacks since it announced ending a ceasefire with the government last month, have long been using the violence in a bid to take over the country and enforce their own harsh brand of Islam.
Bannu district sits just outside North Waziristan, a lawless tribal region bordering Afghanistan that has long been a safe haven for militants.
(Additional Reporting by Saud Mehsud in Dera Ismail Khan; Writing by Asif Shahzad; Editing by Simon Cameron-Moore)
By Jibran Ahmad
