A suicide bomber struck inside the main hall of the shrine of Lal Shahbaz Qalandar -- a famous Sufi saint -- in Sehwan town, located some 300 kilometers (186 miles) from Karachi.
Provincial police chief A.D Khawaja told reporters over 70 people were killed in the blast.
Imdad Soomro, an eyewitness, told Anadolu Agency the bomber struck a crowd of hundreds after the maghrib (sunset) prayer.
"I can see several bodies and scores of injured lying inside the hall and in the courtyard crying for help. There is a total chaos here," Soomro said.
Health officials fear a rise in the death toll as dozens of the injured are in a critical condition.
Footage aired on local TV channels showed people rushing to the scene and shifting victims into private vehicles and a handful of ambulances before rushing them to nearby hospitals.
Ambulances and medical teams from Hyderabad and other adjoining cities were dispatched to the site following the attack.
Two groups have claimed responsibility for the attack: Daesh released a media statement and a second little-known militant outfit, Daulat-e-Islam Khurassan, also said it had carried out the bombing.
Turkey strongly condemned the terrorist attack which it said targeted "the peace and stability of Pakistan".
"We learned with great sorrow that as result of a terrorist attack perpetrated today at a shrine in Sehwan city of Pakistan’s Sindh province, many people were killed and injured," a Turkish Foreign Ministry statement said.
"Taking this opportunity, we reiterate that Turkey will continue to support brotherly and friendly Pakistan in its resolute fight against terrorism," it added.
President Mamnoon Hussain and Prime Minister Nawaz Sharif also condemned the terrorist attack, which is the latest in a string of suicide blasts that have rocked this South Asian nation in the last four days.
Over 100 people have been killed and more than 300 injured in eight suicide attacks and bomb blasts across the country in recent days.
"This is an attack on entire Pakistan," Sharif said in a statement adding that the country was facing a difficult time in the last few days but "the nation stands united against terrorists and will win this war".
Army chief Gen. Javed Qamar Bajwa dispatched a plane and helicopters to lift the critically injured to Karachi.
“The nation should stay calm. Your security forces shall not allow the hostile powers to succeed. We stand for our nation,” Gen. Bajwa said in a message.
“Each drop of nation’s blood shall be revenged, and revenged immediately,” the army chief warned.
Pakistan army spokesman, Maj. Gen. Asif Ghafoor said in a statement: "Recent acts of terrorism are being executed on the directions of hostile powers and from sanctuaries in Afghanistan. We shall defend and respond."
At least 52 people were killed and over 100 injured in a similar blast at a shrine in southwestern Pakistan last November.