Nisar Ahmad, police chief in Sialkot, said on Friday that more than 100 people were inside the mosque in the city centre at the time of the blast and, according to his initial estimates, at least 18 people had died.
Another official at the police control room in Sialkot, however, said that more than 500 people had been inside the mosque.
"It was a suicide attack," Ahmad told reporters. "It was a massive explosion which was heard several miles around."
An angry mob went on the rampage after the blast, and had started pelting police with bricks and stones and wrecking property, police said.
Mosques of Pakistan's Shia minority have often been targeted in sectarian violence with majority Sunni Muslims. Most of Pakistan's 150 million Muslims live in harmony, but there are hardline elements on both sides of the sectarian divide.
The attack comes less than a week after Pakistan arrested a top al-Qaida suspect, Amjad Husain Faruqi, believed to be behind the kidnapping and beheading in 2002 of Wall Street Journal reporter Daniel Pearl, and two failed assassination attempts on President Musharraf that left 17 other people dead in December 2003.