Aftab Khan Sherpao, the interior minister, said two protesters died when a security guard fired on demonstrators in the eastern city of Lahore on Tuesday trying to force their way into a bank, adding that paramilitary troops were deployed in the city to restore order.
Witnesses said the protesters smashed windows and set fire to the sprawling provincial assembly building.
Some of the stone-throwing protesters targeted Western businesses, breaking windows at a Holiday Inn hotel and at a Pizza Hut, KFC and McDonald's restaurants.
They damaged more than 200 cars, two banks, dozens of shops and a large portrait of Pervez Musharraf, the president, witnesses said.
The protesters looted the office of Telenor, a Norwegian mobile phone company, and people ran away with computers, mobile phones and other equipment, witnesses said.
Clouds of tear gas were hanging over central Lahore where the violence had occurred.
Protests have been held across Pakistan during the past week, but Tuesday's demonstrations in Lahore and the capital, Islamabad, were the most violent and destructive.
Tuesday's demonstrations were
the most violent so far
The protest was organised by a little-known religious group supported by local trade associations and one of the main Islamic schools in the city.
Raja Mohammed Basharat, law minister for Punjab, said the organisers promised in negotiations on Monday that the demonstration would be peaceful.
Basharat added that no one had been arrested for the violence but that those responsible would be punished.
The unrest began on Tuesday in the capital when a crowd of about 1000 people, mostly students, marched into a fenced-off diplomatic enclave through the main gate.
Another protest in Islamabad drew about 4000 people, and a separate demonstration involved about 50 lawmakers from religious and moderate parties who marched from parliament to the diplomatic enclave.
They stood silently outside the enclave's main gate for five minutes before dispersing peacefully.