Blast outside Data Darbar left at least eight people dead on Wednesday.
Punjab Chief Minister Usman Buzdar said 10 people lost their lives.
Five policemen were also among the martyred.
Although officials have yet to determine the exact nature of the blast, senior police officers and medics say it was carried out by a suicide bomber.
IG Punjab Police Arif Nawaz said police force was the target of the attack that took place outside the shrine.
Raja Basharat, Punjab law minister, said it would be premature to decide whether it was a suicide blast.
A doctor at Mayo Hospital where the dead and injured were shifted said ball bearings were also used in the explosion which seemed to be carried out by a suicide bomber.
A source at the hospital said body of the bomber was also among those moved to the medical facility.
According to AFP news agency, police have said they are still investigating the nature of the blast, which occurred near the entrance gate for female visitors to the 11th-century.
The shrine has been targeted previously -- a 2010 suicide attack there killed more than 40 people -- and is guarded by heavy security.
Pakistan´s push against extremism was stepped up after the country´s deadliest ever attack, an assault on a school in Peshawar in 2014 that left more than 150 people dead -- mostly children.
Since then, security has dramatically improved -- but militants retain the ability to carry out dramatic attacks.
An attack in the city in March last year left nine people dead, while a major blast targeting Christians celebrating Easter in a park in 2016 killed more than 70 people.
The Data Darbar complex contains the shrine of Saint Syed Ali bin Osman Al-Hajvery, popularly known as Data Ganj Bakhsh. Originally from Afghanistan, he was one of the most popular Sufi preachers on the subcontinent.
Tens of thousands of pilgrims visit the shrine each spring to mark his death anniversary, while it is also crowded weekly with worshippers listening to qawwali, a traditional form of Islamic devotional music.
CCTV Footage
