The explosion killed Siraj Raisani, who was running for a provincial seat with the newly formed Balochistan Awami Party (BAP), provincial home minister Agha Umar Bungalzai told AFP.
Sharif's arrival in the eastern city of Lahore was delayed until 8pm.
Sharif is expected to appeal his conviction and seek bail.
It came as Pakistan's caretaker government launched a crackdown on political gatherings with Sharif, who was ousted by the Supreme Court previous year and convicted in absentia of corruption a week ago, arriving in the country to rally his party ahead of the general elections.
Sharif's son-in-law is now serving his one-year prison sentence on the same charge, which stems from the purchase of luxury apartments in Britain that the court said were bought with illegally acquired money.
Ahead of his return, police swept through Lahore, arresting scores of his Pakistan Muslim League party workers to prevent them from greeting him at the airport.
In a video message from his aircraft en route to Pakistan, Sharif said he knew he would be taken directly to prison on his return. The military denied the accusations, and said its assistance had been requested by Pakistan's election commission. Unidentified officials said the blast targeted his corner meeting.
The military has warned of security fears in the run-up to the tense election on July 25, and said it will deploy more than 370,000 soldiers on polling day.
The attacker detonated his explosive belt close to the ANP leader's vehicle as he approached a rally organised to promote his election in the Yakatoot area of the provincial capital late Tuesday night.
Durrani, who is contesting in July 25 elections against Pakistan Tehreek-e-Insaaf chief Imran Khan, announced that he will continue campaign despite threats. He is a candidate of Muttahida Majlis-e-Amal, an election alliance of radical religious groups.
This is the second major incident of pre-poll violence in Khyber Pakhtunkhwa this week.
Durrani came under attack in 2015 as well.
"There seems to be a conspiracy to sabotage the 25 July elections but the people of Pakistan will not allow any design meant to target these historic elections to succeed", he tweeted.
Haroon Bilour, a party leader, and 21 others were killed. But he said the people of Pakistan will not allow anything to prevent "historic" elections from taking place.
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