The bomber attacked the Muharram procession while it was passing through Shershah Haveli in Jacobabad's Lashari Mohalla, killing 22 people and injuring 40 others, District Health Chief Ghulam Murtaza said.
Deputy Superintendent Police (DSP) Khuda Bakhash said it was a suicide bombing.
"Police have recovered lower part of the body of the possible suicide bomber from the site," SSP Jacobabad Malik Zafar Iqbal Awan said.
The injured were rushed to the District Hospital Jacobabad where an emergency has been declared.
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It was the second major attack that targeted the minority Shia Muslims in the holy month of Muharram when they organise special prayers and take out processions to observe the martyrdom of Hussain Ibne Ali, the grandson of the Prophet.
It came just a day after 12 minority Shia Muslims were killed in a suicide bombing at a Shia shrine in Pakistan's restive Balochistan province.
As many as 61 people were killed and at least another 60 injured in a bomb explosion in a Shia imambargah in upper Sindh district of Shikarpur on January 30.
Thousands of lives have been lost in the last decade due to the ongoing sectarian violence.
The government has taken extraordinary security measures for the two most important days of the month of Muharram with thousands of paramilitary rangers and police deployed in major cities and towns to avoid any terrorist attacks which could trigger off sectarian violence.
Mobile phone and internet services have also been blocked in major cities, including Karachi.