The Taliban initially claimed responsibility but an official spokesman later denied involvement.
It comes just over a year after the massacre of more than 130 students at a school in the nearby city of Peshawar.
Masked by the cover of thick, wintry fog, militants scaled the walls of the Bacha Khan University before storming into classrooms and opening fire on students and teachers.
Those killed were apparently shot in the head.
The violent and bloody siege triggered a three-hour long gunfight with the army and police.
Among the dead are students, guards, policeman and at least one teacher.
Several of the attackers are among the dead.
As army commandos clear out student classrooms, security officials say the death toll could rise.
From a hospital bed, wounded student Tasbeeh Ullah recalls the horror that unfolded.
"I was sitting in class and the firing started. There was lot of fog and visibility was very low. Then the security personnel came and asked us to leave. We ran away from there. We went upstairs on the third floor of VC office. When I was waiting at the stairs, a terrorist came there and opened fire at me. I escaped the fire, I ran upstairs and jumped from the third floor. Then I fell unconscious."
Days before the attack, schools in the nearby city of Peshawar had been closed over possible security threats.
Now there are questions over whether enough had been done to prevent it.
In Karachi, students and members of civil groups gathered to condemn the assualt.
This protestor is angry over the security breach.
"We ask, when security agencies had the knowledge, why they could not provide security? And for how long will we in Pakistan be targeted and killed by the Taliban? For how long?"
The attack comes just a year after the 2014 Peshawar school attack that killed more than 130 people, most of them children.
A senior Pakistani Taliban commander intitally claimed responsibility for the assault, saying it involved four of his men.
But an official spokesman from the Taliban later denied the group was involved, calling it "un-Islamic".
The latest attack comes despite a country-wide anti-terrorism crackdown.
In a statement, Prime Minister Nawaz Sharif assured Pakistanis he is committed to the battle against terrorism.
Pakistan's Information Minister, Pervaiz Rasheed, says the operation against militants, called Zarb-e-Azb, remains ongoing.
"The terrorists have carried out a cowardice act. Pakistan's Zarb-e-Azb is continuing and terrorists are being chased. They have been eliminated up to a good extent. Their fleeing men tried to find a soft target and attack it. Today, they attacked a university. I met the university students. They are firm and enthusiastic that they will continue their education."
World leaders have condemned the attack, with neighbouring India especially vocal.
Indian Prime Minister Narendra Modi took to Twitter to denounce the attack and offer his condolences to the families of the deceased.
While India's Junior Parliamentary Affairs Minister, Rajiv Pratap, has questioned whether the Pakistani government is doing enough to stop terrorism.
"The world has recognised this fact that terror is brewing and the epicentre of terror has now become Pakistan. So, there is a big question that needs to be answered. We cannot forget that Osama bin Laden, who was found in the backyard of a military camp for more than a decade when he was camping there and the Pakistan government did not act. "
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