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One of the militants, who had been arrested and being interrogated at the Counter-Terrorism Department (CTD) police station inside the cantonment, on Sunday snatched an AK-47 from the police and opened fire.
He then freed other suspects being held at the building who took control of the compound. They also took several policemen hostage.
The situation is still tense 17 hours after the incident as a military operation is going on.
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Akram Khan Durrani, a former chief minister of the province, and sitting provincial minister Malik Shah Muhammad have reached Bannu to initiate talks with the militants.
Both Durrani and Muhammad hail from Bannu.
Militants have demanded the security forces to provide them with a helicopter to reach Afghanistan safely.
Mohammad Iqbal, the District Police Officer (DPO) Bannu, said that there was no attack from outside and one of the militants snatched the rifle from police during interrogation and neutralised the guards deployed at the building, The Express Tribune newspaper reported.
“They are in control of the building and we have cordoned off the entire Bannu cantonment,” he added.
The Internet services in the Bannu cantonment have been suspended.
In a video, released by the Tehrik-e-Taliban Pakistan militants from inside the CTD compound claimed that nine police personnel were in their captivity and demanded safe passage to Afghanistan by air in exchange for the release of the hostages.