Witnesses and police said the blast occurred outside Qasr-e-Shabbir Imambargah on the outskirts of Rawalpindi, while hundreds of people were attending a 'majlis' or religious gathering to mark the Islamic month of Muharram.
A large procession had reached the Imambargarh from another nearby prayer hall when the explosion occurred.
Security forces cordoned off the prayer hall which is located in short distance from the Rawalpindi cantonment. Rescue workers rushed the injured to nearby hospitals.
The exact nature of the blast, which occurred at about 11:30 PM could not immediately be ascertained.
Earlier, two powerful explosions, including one involving a suicide bomber, occurred outside an Imambargah in the southern city of Karachi this evening.