The arrests were made in the eastern city of Sialkot after a video of the flogging was shared thousands of times on social media, said police official Iqbal Sindhu.
Police chief Abid Khan said five of those arrested have been charged with torture and extortion, while the other five are under investigation.
The alleged gang leader, who identified himself as Jajja, told Dunya News that he was friends with the victim.
Transgender people in Pakistan are social outcasts who are often forced into begging, dancing and prostitution to earn money.
More From This Section
Fearing attacks, most either change their names or use only one name.
TransAction, a local transgender rights group, posted a video interview with another transgender woman who said she was present when the attack took place.
She said the gang members barged into a house where several transgender women were living, beating and torturing one of them for several hours and shaving the heads of others.