The manoeuvres are taking place near border close to Bahawalpur town in Punjab province.
Officials said that the Prime Minister is chief guest at the exercise.
Army chief General Raheel Sharif will also witness the exercise.
Helicopter gunships and ground troops will take part in the exercise, which comes just days after seven Pakistani soldiers were killed along the LoC.
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Prime Minister Sharif said yesterday that Pakistan cannot be bullied by Indian "tactics" and its restraint should not be "misunderstood" as weakness, warning that his country was fully capable of defending against "any belligerence".
Expressing grief over the death of the seven soldiers, Sharif had said deliberate escalation of tension along LoC by Indian forces is a threat to regional peace and security.
"It is also a futile attempt of the Indian authorities to divert the world's attention from the worst kind of atrocities they are committing" in Kashmir, he had said.
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