Mohammed Afzal, the spokesman for the ministry of food, agriculture and livestock, said laboratory tests that were conducted on samples from the small poultry farm in Sihala, a village about 25km east of Islamabad, confirmed on Sunday that the birds had been infected.
Afzal said it was Pakistan's second outbreak of the H5N1 strain and that officials suspect it may have been caused by infected wild birds entering the farm.
Confirmation of the outbreak by the World Health Organisation was not immediately available.
About 3,500 chicken at the farm were slaughtered and ministry officials were taking samples from nearby farms to find out if the disease has spread, Afzal said.
Last month, the ministry found Pakistan's first cases of the H5N1 strain in birds at two farms in the country's northwest.
That outbreak sent poultry prices plummeting as many people switched to eating beef and mutton.
Other countries bordering Pakistan - Iran, India and Afghanistan - have also reported the H5N1 strain of bird flu.
Globally, there have been a total of 109 human deaths, most of them in Asia, from bird flu since 2003, according to the World Health Organisation.
But there have been no reports of the disease among humans in Pakistan so far, Afzal said.