The armed forces started an emergency helicopter service on Thursday to evacuate some villages amid fears a potential burst could affect about 50,000 people downstream and sever a road serving as an important trade link with China.
Moved into camps
Thousands have been moved into camps amid fears that the lake could burst its banks.
The lake was formed in January when a landslide blocked the Hunza river, and the waters have steadily risen since then, threatening to burst its banks and inundate more than 39 villages in the regions of Hunza and Gilgit.
Over the past few months many villages have been swallowed in the reservoir and stranded people have had to use boats to travel on the icy waters.
Officials hope for a gradual erosion of the blockage once the water starts flowing sometime next week through a canal that army engineers created to drain the lake.
But they have not ruled out a sudden breach that could lead to massive flooding.
Many residents have complained that the government's help came too late.
Gulmit, a popular tourist resort, is also threatened by the build-up of water. Part of the Karakoram Highway that links Pakistan and China, has already been closed.
And the fast-approaching summer season will further melt glaciers and snow caps - posing an even bigger danger.