The school van smashed into the loaded dump-truck on a road near Nawabshah, about 270 kilometres north of Karachi.
The students, all of whom were from the Bright Future School of Daulatpur, were going to give their examinations.
"The accident took place on the Qazi Ahmed link road which is outside Nawabshah and connects to Daulatpur," a police official said.
At least 21 people were killed out of which 19 were children, officials said. The school children were aged between 12 and 16, Geo News reported.
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About 20 others, including teachers and students, were injured and taken to People's Medical College Nawabshah for treatment. Six of the injured persons were reported as critical and were subsequently shifted to the Intensive Care Unit (ICU).
Police reached the site of accident and started investigation. The driver of the truck was arrested after the accident.
Pakistan has a dubious record of fatal traffic accidents which can be blamed on poor roads and reckless driving.
President Mamnoon Hussain expressed sorrow over the incident and condoled the death of the students.