Boulders smashed into the bus which was travelling between the northern towns of Dasu and Chilas, local police official Azhar Nawaz told AFP.
"Seven people were killed and 18 others injured, nine of them in a critical condition," Nawaz said.
The Karakoram highway meandering through high mountains links Pakistan with China and is close to the regions devastated by a giant earthquake on October 8 which killed nearly 74,000 people.